What’s in the blog?
This blog breaks down the recent gold price rally and uncovers what the numbers actually mean for investors. It explores gold’s historical performance, its cyclical nature, and whether it truly serves as an effective inflation hedge. By the end, you’ll understand why smart investing is about balance and timing, not chasing short-term glitter.
Table of Contents
Open any financial news page today, and you’ll see the news flashing “Gold hits yet another high”, “Gold all-time high”, etc. WhatsApp forwards, Telegram channels, and even professional platforms like LinkedIn are flooded with experts talking about the rally.
Today (9th October, 2025), as I’m writing this piece, gold has already touched the 1,23,000 mark per 10g. And, I agree, this is a topic that deserves some attention right now. From ₹75,000 per 10g at the start of 2025 to over ₹1,23,000 as of today, gold has been on a stunning run.
But, before you jump to any conclusion, especially regarding your investments, take a pause. Numbers don’t lie, but they can be misleading at the same time. What looks like a golden opportunity might not be as straightforward as it seems… or maybe it actually is a golden opportunity.
Let’s analyze it together to understand the real picture and see what insight we can draw for our long-term investments.
A Quick Look at Gold’s Journey From ₹88 to ₹1.23 Lakh Per 10g
If you see the gold prices graph in India, you’ll notice a steady long-term rise. Back in 1947, gold was just ₹88 per 10g. Fast forward to October 2025, and it’s at ₹1,23,000. This is a mind-boggling jump. Right?
Actually, it’s not. It seems to be when you just see the gold price in isolation. When you do the math, that’s simply a 9.73% CAGR (Compound Annual Growth Rate) over 78 years. Now, is it a good growth? Absolutely, it is, especially if you compare it to the returns of FD, PPF or any other debt product.
But it’s not extraordinary when compared to long-term returns from equity or index funds like Sensex, Nifty, or any Benchmark Mutual Funds, which have delivered 13–15% CAGR over similar periods.
Just like any other asset class, gold too has cycles of ups and downs. Let us see the roller-coaster ride of gold over these past 78 years.
- 1966–1979: The Golden Era – Gold shot up from ₹83 to ₹1,937 per 10g from 1966 to 1979. This was a jaw-dropping 27.33% CAGR. It was surely the golden age for gold investors.
- 1979–2000: The Flat Years – Gold moved from ₹1,937 to ₹4,400 in 21 years. This was a very flat movement… mathematically, just 3.98% CAGR. Imagine, for two decades, gold went almost nowhere while equity markets exploded globally.
- 2001–2012: The Comeback – Again gold moved from ₹4,300 to ₹31,050 per 10g, a 19.69% CAGR rally in a much smaller time frame. This was mostly driven by the 2008 crisis and global uncertainty.
- 2012–2022: Back to Sleep – Now again, gold moved from ₹31,050 to ₹52,670, registering just 5.43% CAGR in 10 years. Gold stayed steady while equities outperformed again.
Now, in 2024–2025, we’re witnessing yet another spike. The gold rate in India today is higher than ever. But as history suggests, every golden rally eventually slows down.
So, Will Gold Prices Drop in 2025?
At this juncture, you might ask if I am suggesting that after this golden rally we witnessed this year, gold prices are eventually going to drop in 2025. And that’s an important question to ask. But honestly, nobody knows the sure-shot answer.
However, if we go by patterns, such rapid surges usually lead to a cooling period. Gold might stabilize or even dip once global tensions ease and equity markets recover.
So if you’re thinking of entering now just because gold prices today are soaring, you might be late to the party.
Should You or Should You Not Buy Gold Right Now?
The most interesting thing about discussions like this is that one answer leads to another question. After what we discussed so far, the question popping up in your head must be whether you should be investing in gold or not right now.
As already mentioned, thinking about investing in gold right now might be a delayed decision, as gold has rallied really high.
Does that mean you should wait for a dip and then invest your money in gold?
You should definitely allocate a portion of your portfolio to gold. But, at any time, concentrating all your resources in gold (or any other asset class) won’t be a good decision even if you are expecting a bull run.
Smart investors always go for asset allocation rather than putting all their eggs in one basket. By dividing your portfolio strategically into different asset classes, you can ensure balanced returns. Because if you go by trends or news you’ll always be misguided by cherry-picked data.
Let’s understand this with an example. If you remember the market trends between 2007-12… real-estate sector was at boom. It felt that nothing can beat real estate. Lots of people actually put all their money in the real estate sector as they were shown the cherry-picked recent returns data rather than the holistic picture.
And then what happened? From 2012-2022 real estate sector literally gave no returns.
Last 1 year, 5 years or even 10 years return on any sector or asset doesn’t guarantee the same return in the coming years.
Gold is Always a Safe Investment: Myth or Reality?
Now, some of you might want to argue here that gold is always a safe investment. We have been taught this traditionally. And, one of the biggest reasons people invest in gold is that it’s seen as a hedge against inflation (something that protects your purchasing power when prices rise). And to an extent, that’s true.
Over decades, gold has maintained its value even when currencies lost theirs. But here’s where it gets tricky. The kind of inflation we face today isn’t just about groceries or fuel.
Just think for a moment:
- Healthcare costs have been rising by 10–12% annually. (Check the rise in your health insurance premium over the years)
- Education expenses and travel costs are inflating at similar rates. (This perhaps doesn’t even need any explanation)
So, while the official inflation rate might look like 2–6%, the real-life inflation that affects your wallet is growing in double digits. By the way, have you ever thought about lifestyle inflation? Your gadgets, your outings and all those things that make your life ‘happening’ and ‘cool’?
If your investments, including gold, don’t grow faster than the real inflation (not the headline one), you’re technically losing purchasing power even when you’re earning returns. And, in the very beginning of this blog, we discussed that gold has grown only 9.73% CAGR even after hitting the all-time high. That’s why it’s crucial to not just chase safe assets but to build a portfolio that consistently beats inflation over the long run.
My Take
Gold will always have its place in an investor’s portfolio. It’s reliable, tangible, and emotionally significant in India. But history tells us one thing clearly: no asset class wins all the time.
So, rather than chasing short-term rallies, focus on balance. Let gold be your safety net, not your growth engine. And, if you have any doubts regarding your investment decisions, feel free to reach out. Team MoneyAnna is always there to guide and help.
Frequently asked questions (FAQ)
It can be around 5% of your portfolio. It will act as a stabilizer when equities fall, but putting too much in gold reduces your long-term growth potential since gold doesn’t generate income or dividends.
Physical gold might hold emotional and cultural value for us, but as an investment, digital gold or gold ETFs are the smarter choices. They eliminate the storage risk and offer liquidity. It’s even emotionally easier to liquidate when needed, as our culture holds physical gold to very high standards.
Most short-term forecasts are speculative because gold reacts to unpredictable global events, such as wars, inflation data, or interest rate changes. It’s wiser to track long-term gold price trends rather than trying to time short rallies or dips.
Yes, but with nuance. Gold protects purchasing power over the long run, but in shorter periods, it may lag behind rising costs in sectors like healthcare or education. That’s why gold works best as part of a diversified inflation hedge, not your only line of defence.
