How Much Gold Is Golden?

Most projections cluster between $2,800 and $3,300 per troy ounce by year-end 2025, with some outliers suggesting higher peaks. The price in India will cross Rs.95000 in FY-26. The $3,000 mark could hit as early as Q1 if momentum holds.

Since late 2024, speculation about U.S. import tariffs under President Donald Trump has boosted gold prices in New York (e.g., futures at $2,935-$2,909 per ounce, an 11% rise in 2025 per reports). This created an arbitrage opportunity, with gold in London lagging $20/ounce behind, prompting banks like JPMorgan and HSBC to ship gold from London to NYC.

Around 8,000 bars (2% of BoE’s stock) or 12.2 million ounces have been moved since late 2024, raising COMEX stocks to 29.8 million ounces—a 75% increase since November 2024. The Reserve Bank of India also repatriated 202 tonnes to India in 2024. Emerging markets (China, India, Turkey, Poland) are diversifying reserves away from the U.S. dollar amid de-dollarization efforts, sanctions risks (post-Russia-Ukraine), and trade tensions (e.g., Trump’s tariff threats).

The World Gold Council (WGC) reports that central banks added 712 tonnes in the first three quarters of 2024, followed by 333 tonnes in Q4. This reflects sustained demand, though Q2 and Q3 saw slowdowns (183 tonnes and 186 tonnes, respectively) compared to the record-breaking Q1 (290 tonnes). The buyers are especially from emerging markets (e.g., Poland, China, India). The WGC expects central banks to “remain in the driving seat” in 2025, implying no sudden pivot to net selling last week.

The latest monthly data shows a net addition of 53 tonnes, with buying outpacing selling, driven largely by emerging market banks like Poland (21 tonnes) and China (5 tonnes, its first since April).

Central banks like China (2,235 tonnes), India (876 tonnes), Turkey (585 tonnes), and Poland (420 tonnes) are stockpiling gold to hedge inflation, diversify from the U.S. dollar, and bolster stability amid geopolitical tensions (e.g., sanctions, de-dollarization efforts by BRICS+). Gold could face headwinds if the Fed pauses cuts or reverses to fight rebounding inflation (e.g.,the  U.S. CPI hit 2.7% in November 2024). A stronger dollar from steady rates might also cap gains, though the recent dollar-gold correlation has weakened.

The ETF Landscape

The global AUM for physically backed gold ETFs reached US$294 billion by the end of January 2025. This figure reflects the combined value of gold these funds hold, supported by inflows and a rising gold price. In terms of physical gold, global gold ETFs held 3,253 tonnes as of the end of January 2025, up by 34 tonnes from December 2024 due to January’s inflows. This tonnage represents the actual amount of gold backing these funds worldwide.   The top gold ETF buyers recently are likely European institutional and retail investors (leading with $3.4 billion in January).

 January’s surge with US$3.4 billion in inflows, was driven by safe-haven demand in the UK, Germany, and France amid falling bond yields and political uncertainty. North America saw outflows (US$499 million in January), while Asia, particularly China, contributed to inflows (e.g., US$552 million or 8 tonnes in mid-February). followed by Asian investors (China: $552 million in a week, India: $400 million in January), with North American institutions (e.g., JPMorgan via GLD) and other regions (Australia, South Africa) as secondary players.

 The $3.4 billion inflow suggests European investors are the top buyers in 2025 so far, reversing 2024’s trend. This could wane if bond yields rise sharply. China and India’s retail-driven buying is robust but price-sensitive—high prices ($2,900+) might slow inflows unless geopolitical risks escalate.

Conclusion

For most Indian investors, 10–15% in gold strikes an optimal balance—hedging inflation, rupee risks, and market downturns while leaving room for growth assets. Conservative investors can lean toward 15–20%, and aggressive ones 5–10%, split between ETFs, SGBs, and minimal physical gold. This aligns with India’s unique blend of financial and cultural priorities.

Based on the risk profile of an investor the following recommendation can be suggested

·   Young Professional (25–35, High Income): 5–10% (e.g., ₹5–10 lakh in a ₹1 crore portfolio), via ETFs/SGBs, balancing equity growth (70%) and debt (20%).

·    Middle-Aged Family (35–50, Moderate Risk): 10–15% (e.g., ₹15–22.5 lakh in a ₹1.5 crore portfolio), mixing ETFs (5–7%) and physical gold (5–8%), with 60% equity, 25% debt.

·   Retired (60+, Low Risk): 15–20% (e.g., ₹30–40 lakh in a ₹2 crore portfolio), favouring SGBs (10%) and physical gold (5–10%), with 50% debt, 30% equity.