Allocation, not price speculation, should guide buy-sell decisions

If gold is less than 10% of portfolio, buy periodically or during corrections

- SANJAY KUMAR SINGH & KARTHIK JEROME

With the yellow metal recently scaling the ₹1 lakh mark, even ardent gold investors are in a dilemma: should they continue to invest, or is it time to cash out? Experts say that instead of trying to second-guess gold's direction, investors should let their asset allocation guide them.

Positive drivers
The key driver of the rally is policy uncertainty. "The imposition of tariffs and the current negotiations are an effort to change the world order as it existed. The dynamic changes that are taking place have led to a lot of uncertainty," says Chirag Mehta, chief investment officer, Quantum Asset Management Company (AMC). Policy-making in the United States has created a trust deficit, contributing to a weaker US dollar, which is supporting gold prices.

President Donald Trump's proposed policy changes could result in stagflation—a period of high inflation combined with slower growth. "In such an environment, people shun risky assets and move to the asset class that is known to protect value," says Mehta.

Investment demand has surged. "The reason gold has done well in 2025 is the return of investment or exchange-traded fund (ETF) flows globally," says Vikram Dhawan, head of commodities and fund manager, Nippon India Mutual Fund.

Central banks have been raising their gold holdings for several years. "Countries like Russia, China, and India have all increased the share of gold in their reserves," says Shaily Gang, head-products, Tata Asset Management.