Despite stellar gains in the first half of 2025, analysts warn that gold prices may face correction pressures; advise staggered buying instead of fresh lump-sum investments.
MUMBAI (Economy India): Gold prices soared in the first half of 2025, delivering an impressive return of nearly 27%, driven by global economic uncertainties, central bank buying, and persistent geopolitical tensions. However, despite the strong performance, financial experts are urging caution for new investors looking to enter the yellow metal market at current levels.
A Golden Run in H1 2025
- In January 2025, gold was trading around ₹77,000 per 10 grams.
- As of end-June 2025, it touched ₹98,000+, marking a ₹21,000 increase in just six months.
- Internationally, gold has risen from $2,050/oz to over $2,450/oz in the same period.
This marks one of the best semi-annual performances for gold in the past decade.
Key Drivers Behind the Rally
According to analysts, the gold rally has been driven by:
- 🌍 Geopolitical instability: Middle East tensions, Taiwan Strait concerns, and the ongoing Russia-Ukraine conflict.
- 🏦 Central bank buying: Many countries, including China and Turkey, have added gold to their reserves.
- 📉 US dollar weakness and expectations of interest rate cuts.
- 📊 Risk aversion in equities and volatile cryptocurrency markets.
- 💵 High inflation hedging by retail investors.
Expert View: Time for Profit-Booking?
Despite strong fundamentals, experts believe gold is currently in an overbought zone.
“The rally has been extraordinary, but it’s not sustainable at this pace,” says Vijay Mehta, commodities strategist at Prithvi Wealth. “A correction of 5-8% is possible in Q3.”
Concerns for Fresh Investors
Several financial planners are advising retail investors to exercise caution before making new entries into gold:
- 🚫 High valuation risk
- ⚖️ No clear interest rate direction
- 🧾 Better entry points may arise post-monsoon
- 💰 Asset allocation imbalance for those chasing returns
What Should Investors Do Now?
Experts recommend:
- ✅ Book partial profits if your portfolio has seen over 20% gain from gold.
- ✅ Avoid lump-sum buying; prefer staggered SIPs in digital gold or sovereign gold bonds.
- ✅ Watch for price corrections before considering re-entry.
- ✅ Maintain gold exposure at 10-15% of total portfolio.
Domestic Demand Strong, But May Cool Off
Jewellery demand surged in Q1 due to the wedding season and Akshaya Tritiya, but rural demand may slow in the upcoming quarters due to rising prices and monsoon uncertainty.
“Rural buyers are price-sensitive. At nearly ₹1 lakh per 10g, they are likely to delay purchases,” notes Neha Shah, bullion analyst at Kedia Commodities.
Sovereign Gold Bonds: A Safer Route
The government’s Sovereign Gold Bond (SGB) Scheme continues to attract long-term investors due to:
- 2.5% annual interest
- Capital gains tax exemption if held till maturity
- No storage or making charges
The next SGB tranche is expected in August 2025, which could offer a safer investment route at potentially corrected prices.
Gold vs Equity and Real Estate
While equities remained range-bound and real estate slowed due to rising home loan rates, gold outperformed all major asset classes in H1 2025.
However, as equities recover and global monetary policy shifts, gold’s dominance may face downward pressure.
Final Outlook: Stay Grounded
Gold has undoubtedly been a star performer, but entering at current highs may not be prudent. Diversification, discipline, and patience are key, say financial advisors.
📊 Data Watch:
- MCX Gold (24K): ₹98,700 (July 21, 2025)
- Silver: ₹1,13,400/kg
- Gold ETF Inflows: Up 23% Y-o-Y in June 2025
- SGB Issue Price (April 2025): ₹9,250/gram
(Economy India)
