The news of gold touching its record high is all over the internet. Gold has reached its all time high, i.e. over Rs. 90,000 per 10 grams. In such a scenario, it is common for investors to reconsider their gold investment decisions. You might have questions like: is it the right time to invest in gold? Or is it a good opportunity to sell some holdings and draw profits?
Gold has always been seen as the safest place to invest in times of financial turbulence. Due to current economic uncertainty in the US, you might want to invest in gold online. But will that be a good decision? Before you proceed further to investing in gold, let’s analyze some important factors and discuss best ways to invest in gold:
Why are Gold Prices Rising?
There are many global factors impacting the prices of gold right now. One potential reason behind the constantly increasing prices of gold is the increased geopolitical risk due to the ongoing conflict between Israel and Palestinian militant group Hamas. This is encouraging investors toward gold, which is considered a safe asset.
Rahul Kalantri, Vice President of Commodities at Mehta Equities Ltd, says, “Gold and silver prices rose in global markets due to increased safe-haven demand following renewed Middle East tensions. Reports indicate that an Israeli attack on Gaza killed at least 400 Palestinians, while a US strike on the Houthis over the weekend further escalated regional instability, boosting precious metal demand.”
Another factor is likely the US federal Reserve’s policy decision. Investors currently have an eye on Fed Chair Jerome Powell’s outlook on economic growth and inflation. It seems like the Federal Reserve is unlikely to cut interest rates, which may slow down the gold prices’ rally. In the near future, gold price movements will highly depend on inflation, Fed’s policy stance, central bank purchases, and demand from India and China.
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Should You Invest in Gold or Book Profit?
Some investors believe that they should sell their gold investments to book profit while others think it’s a great opportunity and just the right time to invest more in this haven asset. Some experts believe that it’s the perfect time to buy gold. While the dollar’s dominance is in question, gold remains one of the safe assets as it has no counterparty risks. Central banks buying more gold should itself be a reason behind people buying gold.
On the other hand, some investment experts also warn against stagnation. As gold is reaching its record highs, it would be difficult to buy it for quick returns. What investors can do is to have gold as a small part (not more than 20% and ideally around 5-10%) of their investment portfolio rather than putting all their money into it.
Profit-booking from investors at this time can cause volatility in gold prices in the coming future. Therefore, it might be best for investors to follow a diversification approach at this time. There are several ways to invest in gold. This may be the right time to invest in such gold instruments for better risk management in the long term.
Concluding Thoughts
Gold is indeed a haven asset and looking at its constantly increasing price, investors can consider allocating a small part of their portfolio to this. You can look for the best ways to invest in gold online or offline and have it as a small percentage of your investment portfolio.
But at the same time, you should also understand that gold is also volatile. You can find several examples in history when gold prices didn’t move for long periods, leading to stagnation. So, going extra bullish on gold may be risky, but having it in your portfolio can be beneficial in the long term.
It’s always difficult to make decisions when you are not sure whether it is the right time to invest or not. In such situations, the mentors at Strategic Alpha can guide you and help you make the right choice. You can join our Conviction Club, which is a large online community of traders, where they can share experiences and learn from each other as well as from mentors. You also get to attend one-to-one live sessions with expert traders who can guide you and help build the right strategy aligned with your investment goals.
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FAQs
1. Why are gold prices at record highs in 2025?
Ans. Some potential reasons behind gold prices touching their record highs in 2025 include inflation, economic uncertainty in the US, geopolitical risks due to ongoing conflict between Israel and Hamas, US Federal Reserve policy decisions, etc.
2. Is it better to invest in gold or stocks right now?
Ans. Investing in stocks can give you higher returns in the short/long term, whereas investing in gold is safer and is good for those who want to manage risk better in the long term. For long-term risk management along with a chance of high returns, you can consider allocating some percentage of your investment portfolio to stocks as well as gold.
3. Should long-term investors focus on gold or stocks?
Ans. When it comes to portfolio diversification, both stocks and gold should be parts of your portfolio. While stocks can give high returns and outperform inflation over time, gold serves as a haven asset and is a safe way to invest for better risk management.
4. What are the risks of investing in gold at its peak price?
Ans. Some risks associated with investing in gold at its peak price include:
- More investors booking profit may cause gold price volatility.
- There is no guarantee that gold prices will increase with inflation
- Higher interest rates might make gold a less preferred option for investors.
5. Are gold ETFs a good alternative to physical gold investment?
Ans. Both gold ETFs and physical gold have their own advantages. However, gold ETFs offer higher liquidity, transparency, and cost-effectiveness.
