Gold Prices Hit A New High: Should You Buy More Or Wait?

Gold is back in focus. As tensions escalate between the United States, Israel and Iran, investors have rushed towards safer assets. Gold prices have moved sharply in recent days. On the Multi Commodity Exchange in India, gold futures climbed around 3.5%-4% to nearly ₹1.68 lakh per 10 grams. Silver, too, saw strong gains during the session. Gold and silver ETFs in India have also recorded strong inflows, showing that investors are actively shifting money towards safer assets.

Whenever uncertainty increases, gold tends to benefit. But with prices rising sharply, many investors are now asking a simple question: should you buy more gold, or wait?

Why Are Gold Prices Rising?

Gold prices have climbed due to rising trade tensions and global uncertainty. The US has imposed higher tariffs on Chinese imports, pushing investors towards safer assets like gold. A weakening rupee has further driven up domestic gold prices in India.

Should You Add More Gold?

Gold plays a specific role in a portfolio. It acts as a hedge against uncertainty and inflation. However, it doesn’t generate income through dividends or interest. Returns, therefore, depend entirely on price appreciation.

Over long periods, gold has typically delivered moderate annual returns. Equities, despite volatility, have historically offered higher long-term growth. This is why financial advisers usually recommend limiting gold exposure to around 5%-10% of total investments. 

If gold has rallied sharply, its share in your portfolio may already have increased. Buying more at elevated levels can distort your asset allocation. If tensions ease or global conditions stabilise, gold prices can cool. The decision should be driven by allocation logic, not recent price performance.

What Should Be Your Strategy?

If your gold allocation is below your target and you want to add, consider a measured approach. Invest gradually rather than in one lump sum. For example, a fixed monthly investment in a gold ETF can help average costs and reduce timing risk. 

Avoid relying only on physical gold. Jewellery often carries 8%-10% in making charges and involves storage considerations. Gold ETFs or sovereign gold bonds offer the same exposure with easier liquidity. Most importantly, ensure gold remains part of a broader portfolio that includes equities and fixed income.

Gold’s rally reflects rising global uncertainty, and it can help add stability during turbulent periods. Increase in allocation should be a thoughtful decision that aligns with your long-term goals. Use gold as financial insurance within a diversified portfolio, rather than reacting to short-term price movements.

(The author is Associate Analyst, Communications, BankBazaar.com. This article has been published as part of a special arrangement with BankBazaar)