Should you buy gold this Akshaya Tritiya? 

Akshaya Tritiya has long been considered an auspicious time to buy gold. But with prices now crossing the Rs 1 lakh mark, many are left wondering if it still makes sense to invest in gold this festive season. 

Gold’s rally over the past year has been nothing short of spectacular, and long-term believers see its bull run as far from over. Over the past year, gold has delivered around 32 per cent return compared to 5.7 per cent return by Nifty 50.  But the big question is does the gold rally still have room to run, or is a correction on the horizon?

Shaily Gang, Head–Products at Tata Asset Management, says, “Gold continues to stand out as a timeless and strategic investment, with central banks across Asia increasing their gold reserves to reduce dependence on the US dollar. Geopolitical tensions and inflationary pressures have further strengthened gold’s appeal as a resilient hedge against uncertainty. The recent sharp rally in gold prices is a reflection of these underlying structural shifts. While short-term volatility may persist, the long-term fundamentals remain robust. Investors may consider allocating in tranches, and Akshaya Tritiya offers a meaningful opportunity to begin or strengthen their gold investment journey.”

One of the major factors fuelling the gold rally is geopolitical instability. Heightened tensions, trade disputes, and economic uncertainties have significantly boosted gold’s appeal as a safe-haven asset.  “Gold remains the ultimate safe-haven asset, and in times of elevated uncertainty, investors are likely to seek refuge in such assets. Given the current global environment, we believe the overall trajectory for gold could remain upward,” says  Kishore Narne, Director and Head of Commodities, Motilal Oswal.

Beyond geopolitics, central banks worldwide are hoarding gold at record levels. Over 1,000 tonnes of gold were added to global reserves in 2024 alone, with countries like China, Russia, and India aggressively increasing their holdings to reduce dependence on the US dollar. Fears of a prolonged trade war and concerns over currency fluctuations have led many nations to see gold as a reliable hedge against economic uncertainty.

However, several counter forces could impact gold’s trajectory like the US Federal Reserve’s stance on interest rates. Higher interest rates make bonds and fixed-income assets more attractive, potentially drawing investment away from gold. Moreover, if markets stabilise and equities regain investor confidence, gold may face intermittent corrections.

Vishal Bajaj, Director — Wealth at Client Associates, adds a note of caution: “Over the past 22 years, every time gold has delivered 40 per cent returns over 12 months, its subsequent 12-month return has averaged at just 4 per cent.” 

Moreover, an analysis of the Sensex to Gold ratio since 1999 shows that when this ratio is below 1, equities can outperform in the following 3 years and when this ratio is above 1, gold can outperform equities over the next 3 years. “The current ratio is 0.86, which is below the long-term average of 0.96. This means gold is slightly overvalued than equity, if we go by historical numbers. Equities tend to stage a comeback,” as per the Edelweiss Mutual Fund Report. 

If you're planning to buy gold this Akshaya Tritiya, digital routes offer convenience and transparency. Gold ETFs, traded on stock exchanges and backed by 99.5 per cent pure physical gold, are a popular option. Gold mutual funds, which invest in these ETFs, are ideal for investors without a demat account. Both are regulated by SEBI — unlike digital gold sold via wallets, which remains outside regulatory oversight.

As for how much to invest, experts advise moderation. “5–10 per cent of every portfolio should be allocated to gold through gold mutual funds, as the current rally will continue to be driven by global central bankers. The position can be built in a staggered manner,” says Rajul Kothari of Capital League.

Still, caution is warranted. “We recommend an underweight stance on gold in the near term and suggest allocating 5–7 per cent of a long-term portfolio to gold,” Bajaj advises.

Buying gold this Akshaya Tritiya aligns with tradition — but investors would do well to balance short-term risks with long-term potential. A diversified, staggered approach is likely to be wiser than chasing price peaks.