Gold prices have declined sharply from their January 2026 record highs, correcting more than 24% due to factors such as rising oil prices, US Treasury yields and expectations of further US Federal Reserve tightening.
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This has weighed on investor sentiment as many remain speculative about its near-term performance. However, many industry experts remain confident that the short-term volatility in gold is not due to weakening demands or poor fundamentals. As per Mirae Asset Mutual Fund, gold's broader investment rationale remains intact despite recent volatility.
Should You Invest Now?
Traditionally, experts suggest that gold should make up at least 10-15% of your portfolio. If it isn't already, this may be a good time for gold investment. The precious metal has historically given 10% annual returns.
This means that Rs 1 lakh invested in gold could fetch:
Investment amount: Rs 1,00,000
Investment duration: 5 year
Expected rate of return: 10%
Estimated returns: Rs 61,051
Total value: Rs 1,61,051
Are Gold ETFs Better Than Physical Gold?
Choosing between physical gold and Gold ETFs depends on your investment goals:
- Physical gold: It is suitable if you want tangible gold for jewellery or personal use. However, you must understand that purchases generally attract 3% GST.
- Gold ETFs: These are suitable for investment purposes, offering digital ownership without storage or theft concerns. ETF purchases do not attract GST, but still brokerage and other applicable charges may apply.
How Are Gold ETFs Taxed?
- Short-Term Capital Gains (STCG): If you sell your Gold ETF units within 12 months, your profit is taxed as per your income tax slab.
- Long-Term Capital Gains (LTCG): If you sell after 12 months, your profit is taxed at 12.5% without indexation. It also attracts surcharge and cess.
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You can consult a financial expert to discuss how to include gold in your portfolio. Ultimately, the goal should be to maintain a balanced portfolio that aligns with your financial goals, risk appetite and investment horizon.
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