Global uncertainty, geopolitical tensions, and inflationary concerns have fueled a surge in gold prices to record highs in India, as investors seek the metal as a safe-haven asset. • On the Multi Commodity Exchange (MCX), June gold futures jumped 1.71% to Rs 98,946 per 10 grams, with prices crossing the Rs 1 lakh mark per 10 grams in India. • Globally, COMEX June gold contracts touched fresh lifetime highs, reaching $3,500.8 per ounce. A major gap-up opening above Rs 99,000 on MCX triggered high volatility, with prices oscillating between Rs 99,000 and Rs 98,150. The rally is fueled by the Federal Reserve’s reluctance to cut interest rates, despite growing pressure from former President Trump, who has urged rate cuts.
“Gold prices traded with high volatility after a major gap-up opening above Rs 99,000 on MCX, oscillating in a broad range between Rs 99,000 and Rs 98,150 through the session. The rally continues to be fueled by the Federal Reserve’s reluctance to cut interest rates immediately, despite growing pressure from former President Trump, who has been vocal about urging rate cuts. This divergence has further enhanced gold’s appeal as a safe haven, pushing prices to fresh lifetime highs in both Comex and MCX. The ongoing uncertainty around monetary policy direction, inflation risks, and geopolitical trade concerns is keeping sentiment buoyant for gold. However, with prices at record levels, intraday volatility is likely to persist.”
The surge in gold prices has been driven by multiple macroeconomic factors, including central bank gold buying, fluctuations in the dollar index, and inflationary concerns.
- Central bank buying: Central banks have been buying gold in recent months, which has driven up prices.
- Fluctuations in the dollar index: A decline in the dollar index has made gold more attractive to investors.
- Inflationary concerns: Inflation has been a concern for several months, and investors have been seeking safe-haven assets.
Despite traditional safe-haven demand for the US dollar weakening, the rally in gold comes amid growing investor flight to the metal amid rising uncertainty around US monetary policy and intensifying political pressure on the Fed to slash interest rates. The trend was consistent across other Nifty 50-linked ETFs, where returns remained muted. Quantum Nifty 50 ETF FoF recorded the best performance among them at 3.03%, followed by LIC MF Nifty 50 ETF at 3.01%. Invesco India Nifty 50 ETF posted the lowest return in the segment at 2.87%. On the other hand, gold ETFs saw consistently strong gains. Axis Gold ETF led with a 54.85% XIRR, followed by ICICI Prudential Gold ETF at 54.62%, while Nippon India ETF Gold BeES reported 48.32%.
| Feature | Gold ETF | Nifty 50 ETF |
| Underlying Asset | Physical gold (usually 99.5% purity or above) | Equity shares of the Nifty 50 companies |
| Objective | Track the domestic price of gold | Replicate the performance of the Nifty 50 index |
| Returns (1-Year) | ~45–55% (varies by fund) | ~2–3% (in recent 1-year performance) |
| Volatility | Low to moderate | Moderate to high |
| Risk Type | Inflation hedge, safe-haven asset | Market risk, economic and sector-driven |
| Ideal For | Diversification, capital preservation during uncertainty | Long-term equity growth and capital appreciation |
The surge in gold prices has also been driven by investor preference for safe-haven assets amid global economic uncertainty, rising geopolitical tensions, and persistent inflationary pressures. “The sharp rise reflects a growing investor preference for safe-haven assets amid global economic uncertainty, rising geopolitical tensions, and persistent inflationary pressures. Additionally, the sustained rally in international gold prices and the weakening of major global currencies against the US dollar further enhanced the appeal of gold as a strategic portfolio diversifier during the year.”
Ajay Garg, CEO of SMC Global Securities, noted a reversal in March, where gold ETFs experienced net outflows of Rs 77.21 crore from Rs 1,979.84 crore in February, primarily due to profit-booking, despite a 3.82% growth in AAUM to Rs 57,101.29 crore. “Surge in gold prices, up over 25% in six weeks, suggests potential short-term corrections, yet the long-term outlook remains positive. However, experts caution against shifting entirely from equity to gold. While gold ETFs offer excellent portfolio diversification and act as a volatility cushion, they are not substitutes for long-term equity investments.”
Industry experts, including those from Motilal Oswal Wealth Management, anticipate volatility but recommend strategic buying during dips. Their forecast places gold prices between $3,350–3,500, with a domestic range of Rs 96,500–1,00,000, potentially peaking at Rs 1,06,000. Investing in Gold
With gold delivering a solid 18% CAGR over the past three years, many investors are now asking the big question: Should they reduce equity SIPs and allocate more to gold? “Gold has seen a sharp rise in recent years, delivering a CAGR of 18% over the past three years. This surge is largely attributed to increased global uncertainty, geopolitical tensions, inflationary pressures, and central bank buying. While gold has performed well recently, it’s essential to recognize that its returns have historically been inconsistent.”
Chethan Shenoy, Executive Director & Head – Product & Research at Anand Rathi Wealth Limited, added, “Gold often shines during times of uncertainty, acting as a hedge, but may underperform during stable or bullish equity market phases. Therefore, understanding the risk-adjusted return and long-term role of gold in a portfolio is crucial.”
Key Highlights
• Gold prices have surged to record highs in India amid global uncertainty. • The rally in gold comes amid growing investor flight to the metal amid rising uncertainty around US monetary policy and intensifying political pressure on the Fed to slash interest rates. • Gold ETFs have seen consistently strong gains, with Axis Gold ETF leading with a 54.85% XIRR. • Industry experts recommend strategic buying during dips, with a forecast placing gold prices between $3,350–3,500, with a domestic range of Rs 96,500–1,00,000, potentially peaking at Rs 1,06,000. • Investing in gold is a long-term strategy, and it’s essential to understand the risk-adjusted return and long-term role of gold in a portfolio.
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