Gold rush: Geopolitical tensions drive yellow metal gains, safe-haven flows fuel rally; what’s next for investors?

Gold’s rally this year has reignited investor interest ahead of Diwali, with the yellow metal emerging as one of 2025’s strongest-performing assets. Global uncertainties, dovish central banks, and safe-haven demand have kept prices elevated.“Gold has witnessed a parabolic rally since August 2025, soaring from Rs 98,500 per 10 grams to a fresh all-time high of Rs 1,26,930 per 10 grams within just two months,” Religare Broking said in its Diwali Special Gold Report. “The trend structure remains exceptionally strong, supported by sustained buying interest and global risk factors.”The brokerage noted that gold’s price continues to hold above the 20-day and 50-day exponential moving averages, showing “no clear signs of trend exhaustion yet.”

The steep gains, however, have pushed the metal into overbought territory, increasing the likelihood of short-term profit booking or sideways consolidation. “Fresh accumulation may be considered on dips toward Rs 1,14,000–Rs 1,18,000 per 10 grams, with potential upside targets of Rs 1,35,000 and Rs 1,42,000,” the report said. “Conversely, a sustained move below Rs 1,05,000 per 10 grams would weaken the prevailing uptrend and could trigger a deeper corrective phase.”

The bullion brokerage said, noting a 'staggered entry approach' and careful risk management.Global tensions boost demandGeopolitical conflicts — from the Middle East to East Asia, coupled with US–China friction and the ongoing Russia–Ukraine war — have reinforced gold’s safe-haven appeal. “In such uncertain times, gold shines as a safe-haven asset, helping investors preserve capital amid rising volatility,” the report said.Dovish central bank policies have added further momentum. The US Federal Reserve cut rates by 25 basis points in September, ending its tightening cycle, while the RBI held its repo rate at 5.5%, keeping room for future cuts. Lower rates reduce the opportunity cost of holding gold, making the non-yielding asset more attractive.Inflation and ETFs support pricesWeaker currencies have pushed domestic gold prices higher: the US dollar fell nearly 10% in H1 2025, while the rupee depreciated around 5%. Elevated inflation — US CPI between 2.6% and 2.8%, core PCE at 2.6% — has further driven demand, reinforcing gold’s hedge against rising prices.Central banks remained significant buyers. Global purchases exceeded 1,000 tonnes for the third consecutive year in 2024, with China adding 13 tonnes in Q1 2025, India holding roughly 880 tonnes as of late August, and Poland’s reserves rising to 509.3 tonnes.Investor interest in ETFs has also surged: global inflows reached $64 billion, and India’s gold ETFs saw record investments of $10 billion in September. Physical demand is robust too — bar and coin investments rose 11% YoY to 307 tonnes. “Robust ETF demand indicates that investors continue to see gold as an essential part of a well-diversified portfolio,” Religare said.The report noted despite overbought conditions, gold’s long-term uptrend remains intact, while cautioning investors to “buy smartly, stay selective, and manage risk carefully.”(Disclaimer: Recommendations and views on the stock market and other asset classes given by experts are their own. These opinions do not represent the views of The Times of India)