Gold achieved its ‘lakh’ lustre status this April, becoming the best-performing asset in 2025, gaining 28 per cent in dollar terms since January and hitting record levels. 2025 has been an exceptional year for Gold, as a commodity that is invested in, by governments, national banks, people and others. It is not always an investment, it may be more of a safer haven, hedging against risks, and perhaps seen as a safer bet than equities, or even bank deposits.
Over the last one year, gold funds have returned 29.25%. When viewed as longer term investments, say over three, five and 10 years, gold have given an annualised return of 21%, 13.98% and 12.26%, respectively, according to financial analysts.
Over the years, investment channels have increased. According to one estimate, there are some 20 gold ETFS that manage assets. Wealth managers believe investors should allocate 10% to gold in their portfolios. Best is to invest in Gold ETFs, that are exchange-traded funds that give you access to gold without having to buy or store physical gold. They are traded on stock exchanges like regular stocks and their value reflects the performance of gold and investors can buy them during trading hours. There is advantage in ETFs. No storage cost, no worry on purity, no chance of theft. Loans are available against ETFs, easily obtainable as there is zero chance of differences in evaluation; it is the rate of the day that prevails.
Continued macroeconomic uncertainties globally have spiked people’s outlook on gold, giving it an extra heft in global markets. Trump’s broad asides on the global economic order disruptions have added fuel to fire. Earlier, it was the war in Gaza, compounding the global worries after the Ukraine-Russia on-going conflict. There has been the consequent likelihood of higher global inflation.
The correlation between demand for gold and high inflation is a given among economists, likely to hold true going forward. On-going tariff wars, there is yet no sign of any stability, though some posturing has seen a downside, there is yet an upside of over 25 per cent being predicted in some circles.
The case in India is unique. While there are some 876 tonnes in government reserves, considered the fifth largest among global banks, Indian households are said to stock a staggering 25,000 tonnes.
As per World Gold Council, the household gold stock could be 23,925 tonnes to 25,925 tonnes. It also includes part of the gold lying idle with the temples, religious trusts and other organisations, which could come around 4,000 tonnes. There are around 700 temples which own gold, including ones like Sri Padmanabhaswamy in Thiruvananthapuram, Tirumala, Vaishno Devi and Siddhi Vinayak temples. Sri Padmanabhaswamy temple alone is said to own around 1,300 tonnes of gold.
Also, gold loans are a very popular means of raising cash. The gold loan market grew by 76 per cent in 2024-25 and is expected to hit 10 trillion in the current year, according to Icra.
Since 2005, gold has appreciated by Rs.1,200 per cent and seen the highest yearly gain of Rs.33 per cent so far in 2025, the highest gain since the 1980s. Gold was priced Rs.10,000 in May 2006. It took 14 years for gold to climb Rs.50,000-level by 2020. The latest bull-run that started in 2022 saw gold rising Rs.80.5 per cent from Rs.55,000 to over Rs. 1 lakh in three years.
Compared to other asset classes, gold has given the highest return since 2005. While gold has appreciated 1,200 per cent from Rs. 7,638 per 10 gm on MCX, compared to 814 per cent gain in Sensex and 648 per cent return in silver. Gold has gained 33 per cent so far in 2025, the biggest rally since 1980s. The second biggest yearly gain was witnessed in 2007 31 per cent, followed by 29 per cent in 2010 and 27 per cent in 2024. Years like 2002, 2006, and 2009 delivered 24 per cent returns, highlighting a mini bull era during that decade.
How does the future look for gold? It is globally linked to the dollar. So far. A weaker dollar often results in a rise in gold prices. Should the US Treasury yields continue to rise and the dollar weakens in tandem, this would signal higher inflation, a slowdown in the world’s largest economy, further increasing the demand for gold. Should the US decide to revalue its gold reserves, realities could change; should the US decide to sell part of its reserves, prices could get affected.
The one issue about gold is that apart from increase in prices giving it a higher valuation, there is no return on investment, in monthly or any regular basis. As against FDs and other investments that provide a safer return. Or, bet on gold, and pray for higher prices and therefore returns!