Gold Price's Record Rally: Should Investors Start SIPs Or Cut Back On Allocations?

Spot gold futures crossed $4,000 per ounce on Tuesday, driven by economic uncertainty and safe-haven demand. In India, prices climbed past Rs 1,21,000. Financial planners said investors should adopt a cautious and measured approach.

Global gold touched $3,992.27 per ounce, while Indian rates reached Rs 1,21,180, according to India Bullion Co. Analysts said the surge reflects fears of a US government shutdown and growing expectations of interest rate cuts. Gold has gained over 50% this year, its largest annual rise since 1979, supported by geopolitical tensions and central bank buying.

Financial advisers said investors should distinguish between long-term allocation and new investments.

Santosh Joseph, founder of Germinate Investment Services, said the rally is strong but urged caution. “Past peaks have burned investors. Systematic investing works better than lump-sum buying,” he said. He recommended multi-asset funds that include gold or systematic investment plans in gold funds as a measured approach.

Vinit Iyer, CFA at Prudeno Wealth, said high prices make new investments risky. “Investors should trim fresh allocation for now. I expect prices to correct after Diwali,” he said.

The gold rally reflects expectations of US interest rate cuts, which lower the opportunity cost of holding gold. Geopolitical tensions have also increased demand for gold-backed exchange-traded funds. September saw the strongest monthly inflows of the year, the World Gold Council reported.

Investors are monitoring US economic data closely, including the risk of a government shutdown. These uncertainties are supporting gold prices in the near term.