Gold Surges 32% So Far In 2025: Should You Invest Now Or Wait For A Correction?

Gold has been on a remarkable run this year, surging 32% so far in 2025. On Jan. 24, the spot gold price on the Multi Commodity Exchange crossed Rs 80,000 per 10 grams for the first time, and by March it had breached Rs 90,000. Now, it is over the Rs 1 lakh milestone.

The rally has been mirrored globally. Spot gold in the international market crossed $3,000 per ounce in March and climbed to $3,392 by early May. As of 20 June, prices hovered near $3,368 per ounce.

According to Praveen Singh, Head of Commodities and Currencies at Mirae Asset ShareKhan, the surge reflects “intensified macroeconomic and geopolitical pressures” shaped by US fiscal instability, rising debt, weakening dollar confidence, and escalating global tensions.

In comparison Nifty 50 has given returns of 3.19% so far, lower than the 32% surge in gold.

Investor appetite is also evident in gold ETFs. July saw net inflows of Rs 1,256 crore—the third consecutive month of gains—after profit-taking earlier in the year. Globally, gold ETF holdings have risen 11.5% year-to-date, adding nearly 310 metric tonnes, according to the World Gold Council.

Bullion ETFs are passive investment instruments that track the price of gold. Investors had pulled money out of gold ETFs in March and April to book profits amid a surge in prices.

"ETF inflows are a key driver of gold prices, as they reflect sustained demand and lead to increased physical holdings" said Singh.

Key factors fueling gold’s rise include:

• Growing US fiscal stress, with deficits and debt levels seen as unsustainable.

• De-dollarisation trends, with the dollar down 10% year-to-date.

• Record-high global debt of $324 trillion.

• Geopolitical conflicts and trade wars raising safe-haven demand.

• Concerns over central bank independence in the US.

Recent market moves also reflect expectations around US Federal Reserve policy. Gold dipped to $3,311 per ounce last week before rebounding sharply after Fed Chair Jerome Powell hinted at possible rate cuts. Escalating tensions in Ukraine and uncertainty over US tariffs have further strengthened gold’s appeal.

Analysts see both risks and opportunities. Kaynat Chainwala, AVP – Commodity Research at Kotak Securities, noted that gold could test resistance at $3,410 per ounce internationally and Rs 1,03,000 on MCX, while support lies near $3,311. Any breach below this level may drag prices to $3,270 internationally and Rs 97,500 domestically.

"The dovish surprise from Powell, ongoing geopolitical risks, and renewed dollar weakness, especially following concerns over the US central bank’s independence after President Trump dismissed Fed Governor Lisa Cook, are likely to support gold prices in the near term," said Chainwala.

Praveen Singh remains bullish, projecting gold could reach $4,000 within a year, with $4,500–$5,000 possible over the longer term. He recommends staggered allocations and suggests investors maintain around 10% of their portfolio in gold as a hedge.

India, the world’s second-largest consumer of gold, could play a pivotal role in sustaining momentum. According to Singh, the upcoming festive and wedding season is expected to boost physical demand, while a weaker rupee due to higher US tariffs could make gold an even stronger domestic hedge.

"The upcoming festive and wedding season in India, typically a period of strong physical gold demand, could keep domestic prices elevated, especially amid ongoing uncertainties around US sanctions and tariffs," added Chainwala.

Experts advise a balanced approach. For long-term investors, any pullbacks could be buying opportunities, while partial profit-taking at current highs may help lock in gains. With central banks supportive and global risks elevated, gold remains firmly in focus as both a hedge and a growth opportunity.

"Investors are advised to consider taking partial profits at elevated levels to lock in gains while maintaining exposure to further upside. This balanced approach helps manage risk without missing out on potential price appreciation," said Chainwala.