The question now: is gold still a prudent bet in today’s fraught macro climate, or are we sailing into dangerous waters?
Market Sentiment & Key Drivers
| Central bank demand | In 2025, global central banks are on pace to purchase around 1,000 metric tonnes (MT) of gold, continuing their multi-year buying streak. |
| China’s buying spree | The People’s Bank of China (China's central bank) added roughly 13 MT in Q1 alone, pushing its reserves to ~2,292 MT. |
| Gold’s “new regime” | Some analysts believe that gold has entered a higher “pricing plateau” above $3,000/oz for 2025. It may edge towards $3,500–$4,000/oz by early 2026. |
| Interest rate and monetary policy dynamics | As inflation is cooling, markets expect rate cuts—making non-yielding assets like gold more attractive compared to fixed income assets like deposits. |
| Geopolitical tailwinds | Ongoing conflicts and dedollarisation pressures continue to fuel demand for hard assets as safe havens. |
Arguments For & Against Investing in Gold Now
| Why Buy | Why Not |
| Central bank purchases are creating an institutional anchor, effectively guranteeing a durable price floor. | Having surged nearly 38% this year, gold could see corrective pullbacks. |
| Several nations are actively decoupling from US Treasuries and shifting their reserves into bullion. | If inflation rises due to geopolitical uncertainties, central banks may halt or reverse interest cuts, undermining gold’s rally. |
| If interest rates fall as predicted by analysts, gold’s opportunity cost drops and its appeal rises. | Studies show that gold is an uneven hedge against inflation over long periods—it is better as a hedge against the devaluation of currency. |
How to Invest and Hegde
While this is not investment advice, some regular cautions must always be exercised when investing in any currency, commodity or stock:
- Don't put all your money in gold. Hold some of your savings in rupee deposits, stocks and real estate, for example. The rupee is a very stable currency at present.
- Add silver to your basket. It has higher volatility (i.e. price changes), which give better returns during bull runs, though it comes with higher risk.
- Blend allocations. Exchange-Traded Funds can offer a good hedge against holding gold directly, while other mutual funds that have a diverse basket of investments (stocks, bonds, commodities) can help you withstand shocks.
- Rebalance systematically. During strong rallies (rises in prices), you can encash your investment, while in downswings, you can invest more in gold. Also remember that your investments should follow your financial needs and risk-taking abilities, not market trends.
Conclusion
As of September 2025, gold remains a powerful anchor in an uncertain world—but it is not risk-free. The most prudent strategy will be to adopt a diversified and hedged approach. Central bank demand, de-dollarisation trends, and geopolitical tensions suggest further upswings. However, it is better to be prepared for surprises.
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