The rise and rise of gold - What to do if you have missed the recent gold rally

Gold prices have been rising steadily in recent months, reaching new highs with minimal corrections. As a preferred safe-haven asset, it continues to attract interest from investment firms, central banks, and retail investors. Since the beginning of 2025, gold prices have consistently set records, recording a year-to-date gain of approximately 13% in India (World Gold Council, as of Feb 7, 2025). Some of the key factors driving this rise include INR depreciation, global trade policies, geopolitical tensions, and fluctuating interest rates, reinforcing gold’s role as a protective asset.

Beyond its financial appeal, gold holds deep cultural value in India. It has long been associated with wealth, prosperity, and security, extending far beyond investment to play a key role in cultural traditions, weddings, and festivals. As the world’s second-largest consumer of gold, India’s demand remains strong, driven by both financial and traditional values.

Gold seen as a Portfolio Diversifier

Financial advisors often recommend that investors diversify their portfolios to minimize risks. Allocating up to 10% -15% of your investment portfolio to gold can be a prudent strategy. Gold tends to move inversely to stock markets and currencies, which means that when other assets are underperforming, gold could provide a buffer and stabilize overall returns.

Table below shows that since FY2000, gold has fallen less or outperformed equities in every financial year where equities had a negative return:

Source: Bloomberg, internal calculations. Gold prices in INR do not include any customs duties, local taxes etc. Past performance may or may not be sustained in future and is not a guarantee of any future returns.

HDFC AMC/Mutual Fund is not guaranteeing or promising or forecasting any returns.

New-Age Investment Options: Convenience and Flexibility

Gone are the days when buying gold meant purchasing physical jewelry or bars. Today, there are innovative and convenient ways to invest in gold, making it accessible to everyone. Some popular options include:

A comparison of different forms of investments in gold:

NA – Not Applicable. ^In view of individual nature of tax consequences, investors are advised to consult their own professional tax advisors

Source: RBI, other publicly available information

In Budget 2024, favorable taxation changes were introduced, separating Gold ETFs and Gold ETF FoF from Debt Mutual Funds, making them more attractive to investors.

To Conclude

Investing in gold at near-time highs may seem counterintuitive, but its timeless appeal, cultural significance, and financial benefits could make it a wise choice. Whether you’re looking to diversify your portfolio, hedge against inflation, or create a legacy, gold offers something for everyone.

With modern investment options like HDFC Gold ETF and HDFC Gold ETF Fund of Fund investing (lumpsum or through Systematic Investment Plan) in gold has been easier. So, consider adding a touch of gold to your portfolio and let it shine.

Happy investing!

Note: Investors in HDFC Gold ETF Fund of Fund shall bear the recurring expenses of the Scheme in addition to the recurring expenses of the underlying Scheme (subject to regulatory limits)

HDFC Asset Management Company Limited has been managing equity Index Solutions for over 20 years. Index Solutions also include passively managed fund of funds and commodity(ies) based schemes.

Disclaimer: Readers before acting on any information herein should make his/her/their own investigation and seek appropriate professional advice.

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