Why Gold's Surge Is A Central Bank Story, And Not Retail FOMO — Nilesh Shah Explains

Nilesh Shah believes that when regulators speak, investors should pay attention. His own experience, he says, has consistently validated that approach.

On gold, the Managing Director of Kotak AMC points out that the current rally is not a result of retail enthusiasm but is being powered by central banks. Countries in the East like Russia, China, and India have been steadily increasing their gold reserves, while central banks in the West have been net sellers.

This buying trend, he says, is likely to continue as the US dollar weakens, uncertainty around US policy grows, and after recent geopolitical shocks taught governments that overseas securities can be frozen, whereas physical gold held domestically remains secure.

"Gold's bull run is driven by central bank buying, and as long as they continue, we believe gold prices will remain supportive," said Shah while speaking to NDTV Profit.

However, he also reminds investors that gold lacks intrinsic value — it generates no cash flows, dividends, bonuses, or rights. Its value is driven purely by perception, and therefore allocation should be measured. His suggested asset mix is 50–55% in equity, 10% in precious metals, and the balance in fixed income or REITs/InvITs.

On equities, Shah says a tariff deal could trigger a short-term relief rally. Over the long term, earnings will dictate returns and stocks ultimately follow earning power, not sentiment.

While India trades at a premium compared to other emerging markets, long-term returns will depend on earnings growth. After six months of single-digit growth, Shah expects December quarter earnings to move into double digits.