In fact, most would have predicted a correction if the yellow metal hit six digits.
Not only was there no correction for a long time after gold crossed the ₹1 lakh mark, but even the small decline that started in mid-October 2025 also didn’t last long. The price of gold is at an all-time high again.
Just look at the chart of the gold price over the last three years.
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An incredible rise
The gold bulls are certainly in control of the price right now. ₹1.5 lakh per 10gm is in sight. Can it hit ₹2 lakh in 2026? If the ongoing momentum sustains, it is possible.
The gold bulls can be forgiven for thinking that the price will keep rising. After all, the recent gains have been truly spectacular, especially compared to stocks.
Back in 2024, gold delivered 20% compared to the Nifty’s 8.7% gain.
And 2025 saw the upward momentum continue. The price rose from about ₹78,000 to ₹133,000, about 70%, till mid-October, before a short-lived correction.
In fact, since late July 2024, the gold price has moved up from around ₹68,000 to ₹1.45 lakh. That was a rise of 132% in a little over 14 months.
If we go back a little further, the price has been moving up sharply since February 2024 from 64,000 levels. That was a stunning 108% gain in 20 months.
But can gold really sustain such gains? And can it beat stock-market returns?
First, let’s examine the outlook for gold this year and beyond.
Gold price outlook
Can gold continue to rise in the short term?
The simple answer is yes, it can. The upward momentum in the price is very strong.
But could the price momentum sustain throughout 2026 and beyond?
Many so-called ‘experts’ have already made predictions and forecasts about the gold price. We avoid making predictions in our editorials.
But we will say this: The future price of gold will depend on the sustainability of the underlying factors that are driving up the price now.
What are these factors?
There are 3 main ones we can identify.
1. Fallout of US trade policies
Gold has always been a safe-haven asset. People flock to gold either when times are tough or when there is uncertainty in financial markets.
Uncertainty has increased due to US President Donald Trump’s tariff policies. This creates a degree of concern in financial markets because markets hate uncertainty.
There is also inflation to consider. Trump’s policies have had the effect of increasing the rate of inflation US, at least in the short term. For now, inflation has not spiked too much in the US. But this will remain a concern as long as tariffs remain in place.
Gold has always been an effective hedge against inflation throughout history.
There are also some concerns that the US economy could end up in a recession in 2026. This is in the context of both geopolitical and trade risks. Gold typically does well when there is talk of a recession.
2. Geopolitics
The US action in Venezuela was a huge wake-up call for those who thought that if peace agreements are put in place in hotspots like Gaza and Ukraine, gold would lose some of its attractiveness.
Despite a peace agreement in Gaza, the recent events in Yemen and Iran have only resulted in higher tensions in the region.
The Middle East has proven to be a hot potato for financial markets. The last thing financial markets want is another war in this region. If there is a resumption in hostilities for this reason, gold will rise.
Gold has long been seen as a means to preserve wealth during political turmoil. During such times throughout history, people have chosen to hold on to their wealth in physical gold instead of any other asset. This won’t change in the foreseeable future.
It’s safe to say that after the events of the last two years, the bullion market is keeping a hawk eye on events in the Middle East.
3. Speculation and FOMO
And then there is good old speculation.
Sometimes, the price of an asset goes up just because it’s going up.
We mean that people buy because they think the price will rise due to others buying. They just want to tag along for the ride.
In financial language, this is called surfing the price momentum. The ‘extra’ buying of these short-term traders adds to the upward price momentum.
There is also FOMO (fear of missing out) at play here.
Fear can push asset prices in either direction. It causes people to sell when prices start going down, but it can also cause people to buy.
This is due to traders feeling they are missing out on some easy, short-term profits. The thinking goes, ‘If others are making easy money, why shouldn’t I?’
If you are tempted to buy gold now, you should be aware that speculation is unreliable. You can’t depend on speculators taking up the price, so that you can ride along and make easy profits.
That’s not how financial markets work. If that were possible, then every trader would be rich. But that is not the case.
Should you sell stocks to buy gold?
We believe, investors should not get carried away by big price moves. The reason is the same for stock prices as well as gold prices.
When everyone in the market is talking about a rising price of gold— ₹2 lakh target prices, etc.—it’s easy to forget that the opposite can also happen.
The bulls may have the upper hand, but investors should closely watch for any potential changes in the underlying factors driving gold higher. If these changes are significant, then the gold price will fall.
At Equitymaster, we believe in having 5-10% of one’s portfolio in gold at all times. But investors should not see gold as a potential substitute for any other asset.
This is certainly the case with stocks. Equities are a vital asset in your portfolio.
Don’t be tempted to sell stocks to buy gold. Investors should not see the two asset classes as potential substitutes for one another.
If you’re a long-term investor and have bought fundamentally strong stocks at reasonable valuations, then you don’t need to do anything. You’re already in a good position to create long-term wealth.
Now, if the fundamentally strong stocks in your portfolio were to fall during a correction, you could consider buying more of them.
Just be sure to periodically check your portfolio for any stocks that have become highly overvalued and for companies whose underlying fundamentals have deteriorated.
To conclude, we will say that it makes sense to hold some gold in one’s long-term portfolio, but it does not make sense to speculate on its price.
Do your due diligence before making any financial investment.
Happy Investing.
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com
