After dazzling rally, gold looks ready to make way for stocks

Indian investors appear to be taking a U-turn from safe haven gold to riskier assets like equities, as green shoots of geopolitical stability begin to emerge across the globe.

- Abhinaba Saha

With the precious metal already delivering returns as high as 25% in the first four months of 2025, experts believe there is limited room for significant upside, especially as global uncertainties begin to wane. This likely explains why domestic gold exchange-traded fund (ETF) redemptions reached a one-year high last month.

Moreover, gold has remained under pressure lately, with prices being very volatile in the last three to four weeks. Going forward, Kaynat Chainwala, associate vice-president of commodity research at Kotak Securities, anticipates a 7-8% correction in gold prices in the short term, driven by easing US-China trade tensions.

"However, gold prices still have room for improvement with eventual (US) rate cuts on the horizon and continuous central bank buying. Till then, gold can find a key support at the $3080 per ounce level," she said.

But gold's geopolitical risk premium is beginning to fade as the ongoing US-China trade negotiations have shown significant progress, noted Apurva Sheth, head of market perspectives and research at Samco Securities.