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The year 2024 witnessed a remarkable surge in gold prices, reaching unprecedented levels in the domestic market. The price of gold exceeded Rs 80,000 per 10 grams, marking a significant increase of over 26%. This substantial growth can be attributed to a confluence of factors, primarily global political instability, anticipation of US interest rate reductions, and active purchasing by central banks worldwide. These events created a climate of uncertainty and risk aversion, driving investors towards the safe-haven asset of gold. The robust performance of gold in 2024 builds upon its strong performance in the preceding two years, with 14% growth in 2023 and 12% in 2022. This consistent upward trend demonstrates gold's resilience as an investment and its ability to outperform many other asset classes during periods of economic volatility.
Looking ahead to 2025, financial experts remain optimistic about the prospects for gold. They advise investors to maintain a significant allocation of gold within their portfolios, emphasizing its role as a crucial diversifier and its potential for further gains. While the rate of growth is anticipated to be more moderate than the exceptional increase seen in 2024, experts suggest that investors should view any price dips as strategic buying opportunities. The upcoming leadership transition in the United States, with Donald Trump assuming the presidency, introduces a new element of uncertainty into the equation. This adds another layer of complexity to the already intricate interplay of global economic factors influencing gold prices. The impact of Trump's policies on the economy and global markets remains a subject of speculation and analysis among experts.
Chirag Mehta, chief investment officer at Quantum Mutual Fund, offers valuable insights into the potential impact of the new US administration on gold prices. He draws parallels between the current situation and the period following Trump's first election in 2016, noting an initial period of uncertainty followed by a sustained rise in gold prices. Mehta attributes this to the uncertainty generated by Trump's policies and the subsequent diversification of investments away from the dollar. He believes a similar pattern may unfold in 2025. Mehta advocates a measured approach to gold accumulation, suggesting investors should leverage short-term price corrections as buying opportunities and gradually increase their gold holdings over several months. This strategy minimizes risk and allows for the opportunistic acquisition of gold at favorable price points. He highlights that the aggressive policy changes planned by the new US administration could potentially be inflationary in nature, potentially necessitating interest rate reductions to stimulate economic growth.
Sachin Jain, regional chief executive officer of India for the World Gold Council, further reinforces the importance of gold in a diversified investment portfolio. Despite predicting relatively stable gold prices throughout 2025, he strongly advocates for allocating 10-15% of one's investment portfolio to gold. This recommendation underscores the enduring value of gold as a reliable safe haven asset and its role in mitigating risk within a broader investment strategy. Jain's perspective, aligned with other experts, highlights the continuing relevance of gold in a world characterized by economic and geopolitical uncertainty. The consensus view among experts suggests that gold will continue to serve as a hedge against inflation, political instability, and currency fluctuations. This makes it a valuable asset to consider for both individual investors and institutional portfolio managers.
In conclusion, the outlook for gold in 2025 appears positive, driven by a combination of factors including the anticipation of continued global uncertainty, potential inflationary pressures, and the impact of the incoming US administration's policies. While the rate of growth may not match the exceptional levels seen in 2024, the underlying fundamentals supporting gold prices remain strong. Financial experts advise investors to adopt a measured approach, taking advantage of short-term price dips as buying opportunities and maintaining a strategic allocation of gold within their diversified investment portfolios. The potential for further gains, combined with gold's inherent qualities as a safe haven asset, makes it an attractive investment option for navigating the complexities of the global economic landscape in the coming year.
Source: Gold prices: Will 2025 be a golden year for gold? Here’s why experts are bullish on the yellow metal