Gold Prices in India Surge 115% in a Year: Is a Correction Ahead or a Structural Shift Underway?
Gold prices in India have witnessed an extraordinary rally over the past year, rising by nearly 115%, triggering debate among market experts over whether the yellow metal is approaching bubble territory or simply undergoing a long-term repricing driven by global macroeconomic changes.
Over the last 12 months, gold prices have climbed by more than ₹93,000 per 10 grams, while in January alone (up to January 29), prices surged by over ₹42,000, marking a gain of more than 32% in just a few weeks.
The sharp rally has been supported by a combination of geopolitical uncertainty, a weakening US dollar, expectations of US Federal Reserve rate cuts, aggressive central bank buying, and robust retail demand. However, the pace of the rise has raised concerns about sustainability and the risk of a near-term correction.
Has Gold Entered Bubble Territory?
Some market participants believe gold may be overheating in the short term, making it vulnerable to profit-booking and consolidation.
Vandana Bharti, Head of Commodities Research at SMC Global Securities, said the rapid price acceleration suggests a phase of overheated optimism.
“The sheer velocity of this rally warrants caution in the near term. We are already seeing pressure points such as higher margins and disruptions in the physical coin market, which could gradually affect trading volumes,” Bharti said.
She also warned that logistical stress on gold exchange-traded funds (ETFs), which must back holdings with physical metal, could lead to further restrictions if supply struggles to match demand.
“While the long-term structure for gold and silver remains positive, the current entry point carries higher risk for fresh investments. Some cooling of speculative excess is likely,” she added.
Echoing a cautious tone, Manish Srivastava, Executive Director at Anand Rathi Wealth Limited, highlighted that sharp rallies are often followed by periods of consolidation or correction.
“Gold’s near 120% rise and silver’s over 300% surge since 2025 represent exceptional moves that deviate from long-term averages. This does not automatically indicate a bubble, but upside may be limited while volatility remains elevated,” Srivastava said.
Not a Bubble, but a Monetary Reset?
In contrast, other experts argue that the rally reflects deeper structural changes rather than speculative excess.
Anindya Banerjee, Head of Currency and Commodity Research at Kotak Securities, said gold is benefiting from a global monetary realignment.
“What we are witnessing is not speculative froth but the visible impact of a larger monetary reset. De-dollarisation and de-globalisation are reshaping the post-Bretton Woods financial order,” Banerjee said.
According to him, gold and silver are reclaiming their role as reserve assets as confidence in fiat currencies weakens.
“Markets are not pricing a gold bubble. They are pricing the early deflation of a fiat currency bubble, with value migrating back to real money,” he added.
Riya Singh, Research Analyst for Commodities and Currency at Emkay Global Financial Services, also believes the rally is structurally driven.
“Rising US debt, persistent fiscal deficits, and fragmentation of global trade have repositioned gold from a crisis hedge to a core monetary asset. Calling this a classic bubble risks ignoring these structural shifts,” Singh said.
Should Investors Book Profits or Buy on Dips?
Experts broadly agree that volatility is likely in the near term, making disciplined portfolio management essential.
Bharti recommends partial profit-booking for investors with large gains, while maintaining exposure for the long term.
“The broader trajectory remains bullish, but the market needs time to digest these gains and build a sustainable base,” she said.
Banerjee believes gold and silver should remain strategic portfolio holdings, not short-term trades.
“Corrections of 10–15% in gold and 25–30% in silver are inevitable. These should be seen as accumulation opportunities, not exit signals,” he said, suggesting a 25–30% allocation to precious metals for long-term investors.
Srivastava advises investors to avoid chasing momentum after such a sharp rally and stick to asset allocation discipline.
“Equities should remain the core driver of long-term wealth. Gold works best as a portfolio stabiliser and should ideally be capped within a combined 20% allocation alongside debt,” he said.
Singh added that for long-term investors, market dips may offer buying opportunities, while profit-taking should be viewed as prudent portfolio rebalancing rather than a bearish signal.
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