top of page

Making Sense of the Recent Gold Rush ✨

The price of gold has gone up 13% this year, outperforming major global and domestic equity markets. At above US$ 2,400 per ounce, gold prices have reached an all-time high, and has posted gains for four weeks straight.


Typically, gold prices rise as a response to high inflation, turbulent markets or increased risk aversion. Its ‘safe haven’ status drives investors to pile on in times of uncertainty, in order to preserve their wealth.


However, inflation is currently heading back towards comfort zones determined by most central banks, making the up-move rather perplexing.


What’s Going On?

With inflation heading down, into the comfort zones of most central banks, inflation-hedge as a reason can be thrown out of the window. Other than that, there still are a couple of relevant reasons that explain the rally:


  1. Geopolitical Stress - The ongoing conflict between Russia and Ukraine, and new developments in the Middle East have been spiking geopolitical risk higher. These risks can result in a cascading effect on the markets, and do generally result in heightened risk aversion. Gold, as always, takes form of a safety reserve, and investors flock to it to avoid capital depreciation.

  2. Rate Cuts - Central banks have been preparing to cut rates. Usually, gold prices tend to rise when interest rates fall. While Switzerland has already cut rates, and Fed has stuck to its projection of cuts in 2024, other central banks are also expected to follow suit. Coordinated cuts globally could result in a further spike in gold prices.


Why Should I Care?

The larger inflation trend has been under control. In fact, just last week, data showed that India’s inflation cooled in March to a 10 month low.


However, it is worth noting that there are risks to inflation, and it may be a little too early to call it a sustainable downward trend.


  1. Oil prices have been up 18% to around US$ 90 a barrel. Energy is a key component in determining inflation, and any rise here can result in a spike to inflation, which puts pressures on the economy

  2. Yet another terrible summer and a large number of heatwaves can cause crop destruction and depletion of water reserves. Food inflation too becomes a legitimate risk given the erratic weather pattern


If either or both of these factors were to play out, inflation could potentially be a risk again, causing a further rush into gold.


What to Do?

With equity markets at an all-time high, and uncertainty at several fronts - geopolitical and economic, gold definitely stands out as the traditional safety net.


Despite its rally, gold offers a distinctively favourable risk-reward equation, which makes it worth considering as an allocation in the portfolio.


At Rupeeting, we’ve done some detailed work comparing the several methods available for taking exposure to gold. You can always click on this link and get more information - https://www.rupeeting.com/post/the-best-way-to-invest-in-gold


In our opinion, gold ETFs and Sovereign Gold Bonds turn out to be the winners.

9 views0 comments

Recent Posts

See All

Comments


Rupeeting

Powered by Paterson Securities Group

  • Rupeeting Youtube
  • Rupeeting X
  • Whatsapp

Email: sawaal@rupeeting.com

Support: +91 97697 70046

22/A Shah Industrial Estate

Off Veera Desai Road

Andheri West

Mumbai 400053

Rupeeting Logo.png

Alphaware Advisory Services Private Limited (Brand Name - Rupeeting) makes no warranties or representations, expressed or implied, on products and services offered through the platform. It accepts no liability for any damages or losses, however, caused in connection with the use of, or on the reliance of its advisory or related services. Past performance is not indicative of future returns. Please consider your investment requirements, risk tolerance, goals, time horizon, risk and reward appetite, and the cost associated with the investment before choosing a fund, or designing a portfolio that suits your needs. Performance and returns of any investment portfolio can neither be predicted nor guaranteed. Investments in mutual funds, stocks, ETFs and any other investment products that you see Rupeeting's views being expressed on are subject to market risks. Please read all scheme related documents carefully. The content and data available in the material prepared by the company and on the website of the company, including but not limited to index value, return numbers and rationale are for information and illustration purposes only. Charts and performance numbers do not include the impact of transaction fee and other related costs. Past performance does not guarantee future returns and performances of the portfolios are subject to market risk. The information is only for consumption by the client and such material should not be redistributed. Data used for calculation of historical returns and other information is provided by exchange approved third party vendors and has neither been audited nor validated by the Company. Detailed return calculation methodology is available here. Detailed volatility calculation methodology is available here. Registration granted by SEBI, membership of BASL and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. Alphaware Advisory Services Private Limited [SEBI RIA Registration No: INA000015747] [Validity of registration: February 08, 2021-Perpetual] [BASL ID: 1610] [Address: 22/A Shah Industrial Estate, Off Veera Desai Road, Andheri West, Mumbai 400053] [Principal Officer details: Mr. Sagar Lele, Email id: sagar.lele@rupeeting.com, Contact No. +91-9769770046] [Compliance Officer details: Mr. Sagar Lele, Email id: sagar.lele@rupeeting.com, Contact No. +91-9769770046] [Grievance Officer details: Mr. Sagar Lele, Email id: sagar.lele@rupeeting.com, Contact No. +91-9769770046] [Platform Partner: smallcase] [CIN – U74999MH2019PTC320573] [GST No: 27AARCA8847R1ZF] [SEBI regional address: SEBI Bhavan BKC, Plot No. C4-A, 'G' Block, Bandra-Kurla Complex, Bandra (East), Mumbai, Maharashtra, India, Pin Code – 400051.]

© 2025 by Rupeeting

bottom of page