The cultural and traditional significance of gold and silver, as well as its allure as a safe-haven asset play a pivotal role in consumer demand and shaping investment strategies. The age-old practice of purchasing these precious metals sees a boost during festive and wedding seasons, as they represent prosperity, success, and good fortune.
But beyond cultural significance, does investing in precious metals make financial sense this year? With gold prices surging approximately 49 per cent since last year’s celebration, from ₹67,100 to touching ₹1,00,000 per 10 gm, investors face important considerations when planning their precious metal purchases.
The glow for gold
These past few months have witnessed an extraordinary rally in gold prices, delivering remarkable returns for investors. The 49 per cent appreciation significantly outperformed many traditional investment vehicles, reinforcing gold’s reputation as a reliable store of value during economic uncertainty and as a safe-haven asset.
Several factors have contributed to this impressive performance, including ongoing conflicts, such as the Red Sea crisis, the Russia-Ukraine war, and the Israel-Palestine conflict, which have intensified economic uncertainties, driving investors toward safe-haven assets. Additionally, central banks worldwide have continued to increase their gold holdings, viewing it as a crucial hedge against currency fluctuations and economic flux.
A key tailwind for India has been the reduction in gold import duty from 15 per cent to 6 per cent, which stimulated demand by making gold more accessible, though prices have since rebounded substantially. Furthermore, given India’s pivot towards green energy and technologies, silver too has rallied due to its industrial applications.
Investment outlook for 2025
As we assess the investment potential for gold and silver, several factors warrant careful consideration. Analysts forecast gold prices could increase over current levels based on investment demand.
While gold remains at historically high levels, many financial experts recommend maintaining an allocation of approximately 8 per cent to 10 per cent of their investment portfolios in gold, recognising its role as a hedge against inflation and economic volatility.
On the other hand, silver presents a compelling complementary investment option to gold, with forecasts suggesting prices could rise further. Its industrial applications, particularly in green technologies like electric vehicles and solar power, provide additional drivers for demand beyond its precious metal status.
Key considerations before investing
When investing in gold, purity is paramount. The purer the gold, the greater its value and potential return on investment. While the karat system provides a basic measure of gold content at 24-karat, the fineness level offers a more precise parameter, as there are many variations within 24-karat gold.
Fineness measures the parts per thousand pure gold present, with the highest quality denoted at 999.9+ purity, indicating 99.99 per cent pure gold content. A fineness of 999 means 99.90% purity, while 22 karat gold is of 916 finesse, signifying 91.60 per cent gold purity. Purchasing gold with the highest possible fineness of 999.9+ maximises returns per unit weight, ensuring longevity and higher resale value.
Reputable sellers prioritise offering 999.9+ purity gold with minimum balance metals. They will provide certifications attesting to the authenticity and fineness of the gold. Furthermore, gold products with a purity of up to 99.99 per cent+ and accompanied by a positive weight tolerance enhance an investment portfolio. This positive weight tolerance ensures that each gold piece exceeds the stated weight on the product and packaging to deliver exceptional value.
Lastly, the London Bullion Market Association (LBMA) accreditation is the globally recognised hallmark of purity standards. LBMA’s “Good Delivery” standards cover specifications like purity levels, weight, physical characteristics and more. Products bearing this accreditation enable traceability and acceptance across international gold markets and institutions like gold ETFs.
While past performance doesn’t guarantee future returns, gold’s enduring value proposition—combining cultural significance with financial security—suggests that thoughtful precious metals investment, especially during festive seasons like Akshaya Tritiya, Dhanteras, Diwali and many more, aligns with both tradition and prudent financial planning, provided investors prioritise quality, certification, and appropriate allocation within their broader investment strategy.
The author is Interim CEO & Chief Financial and Technology Officer at MMTC-PAMP
Published on June 7, 2025