Rebalance if your allocation to yellow metal has risen above 10%

New investors may invest in a staggered manner provided they have a 7-10-year horizon

- SANJAY KUMAR SINGH & KARTHIK JEROME

Gold recently surged past the $3,000 per ounce mark in the international market (it is priced at ₹87,816 per 10 grams in the Indian market currently). Investors, both existing and new, should avoid extreme reactions and proceed with caution in the wake of this landmark being crossed.

Key drivers of the rally

Trade war: President Donald Trump's tariffs on trade partners could have several consequences. "These policies could be inflationary for the US. There is also a possibility of competitive devaluation of currencies by exporters to the US. We could also have a mix of the two scenarios. Either or both of these developments will lead to investment demand for gold both from the US and emerging markets," says Chirag Mehta, chief investment officer, Quantum Asset Management Company (AMC).

Growing investment demand: While earlier the rally was driven primarily by central bank demand, that is no longer the case. "In 2025, investment demand has been the primary driver of the rally. Investment demand refers to demand for gold ETFs, and to some extent, bars and coins," says Vikram Dhawan, head of commodities and fund manager, Nippon India Mutual Fund.

Central bank demand: Over the past three years, central banks have significantly increased gold purchases. "Over the long term, central banks have on average bought around 400 tonnes of gold annually. In the past couple of years, however, they have bought over 1,000 tonnes annually," says Dhawan.