Gold Prices in India Skyrocket by Over ₹93,000 Per 10 Grams in One Year
The Indian gold market is witnessing an unprecedented surge, with prices soaring to record highs that have left investors and analysts both excited and cautious. Over the last twelve months, the gold rate in India has increased by more than ₹93,000 per 10 grams, representing a staggering rise of approximately 115%. This remarkable upward trajectory has continued into the new year, with January alone (through the 29th) recording a jump of over ₹42,000 per 10 grams, translating to a gain of more than 32%.
Is Gold Entering Bubble Territory?
The dramatic appreciation of gold prices has sparked intense debate among financial experts about whether the precious metal has entered bubble territory. Several factors are driving this historic rally, including geopolitical uncertainties, weakness in the US dollar, anticipated rate cuts by the US Federal Reserve, aggressive buying by central banks worldwide, and robust retail demand across markets.
Vandana Bharti, Head of Commodities Research at SMC Global Securities, expresses clear concern about the current market conditions. "The sheer velocity of this 'rocket rally' warrants caution for the immediate term," she states. Bharti points to visible friction in the market, including increased margin requirements and disruptions in the physical coin market, which could gradually reduce trading volumes. She warns that logistical challenges for Exchange-Traded Funds (ETFs), which must back their shares with physical gold held in vaults, could lead to further suspensions of buying facilities by 2026 if supply cannot keep pace with demand.
Manish Srivastava, Executive Director of Anand Rathi Wealth Limited, highlights historical patterns that suggest caution. "Gold’s nearly 120% climb and silver’s 320% rise since 2025 both represent exceptional, unsustainable moves that deviate from long-term trends," he explains. While Srivastava stops short of declaring a bubble, he emphasizes that upside potential appears limited while risks of increased volatility and a cooling-off period remain elevated.
The Case for a Fundamental Monetary Reset
Not all experts view the gold rally as speculative excess. Anindya Banerjee, Head of Currency and Commodity Research at Kotak Securities, presents a compelling alternative perspective. "Rapid de-dollarisation and de-globalisation are dismantling the post-Bretton Woods monetary order," he argues. Banerjee believes what markets are witnessing is not speculative froth but rather "the visible expression of a much larger monetary reset already underway."
According to Banerjee, gold and silver are reclaiming their traditional roles as reserve currencies, with capital flowing toward bullion as protection against multiple risks:
- Currency debasement by central banks
- Confiscation risk
- Capital controls
- Financial repression by governments
"This is a repricing of money itself," Banerjee asserts, suggesting that markets are witnessing the early deflation of a fiat currency bubble rather than a gold bubble.
Riya Singh, Research Analyst for Commodities and Currency at Emkay Global Financial Services, supports this structural view. "Rising U.S. debt, persistent fiscal deficits, fragmentation of global trade, and growing questions around the long-term neutrality of reserve currencies have repositioned gold from a crisis hedge to a core monetary asset," she explains.
Investment Strategies in Volatile Times
With such divergent views on the nature of the gold rally, investors face challenging decisions about how to position their portfolios.
Bharti recommends partial profit-booking for current holders as a prudent strategy to navigate potential volatility. "The long-term trajectory remains bullish due to the widening supply-demand gap and macroeconomic shifts, but the market needs time to digest these gains and build a sustainable base before the next leg up," she advises.
Banerjee maintains that gold and silver deserve to remain core strategic holdings rather than tactical trades. He suggests maintaining a portfolio allocation of 25–30% to precious metals, while warning that "volatility will be violent" with corrections of 10–15% in gold and 25–30% in silver being not only possible but inevitable. However, he views such corrections as accumulation opportunities rather than exit signals.
Srivastava cautions against chasing momentum after such a massive rally. He recommends that equities should remain the foundation of long-term wealth generation, with gold serving as a portfolio stabilizer ideally kept within a combined 20% allocation alongside debt. He notes that silver has proved too volatile for permanent inclusion in long-term portfolios.
Singh offers balanced guidance for investors: "For long-term investors, dips are likely to be opportunities rather than signals to exit entirely, while disciplined profit-taking should be viewed as portfolio management, not a bearish call on the metals themselves."
The gold market in India stands at a critical juncture, with prices having achieved extraordinary gains that demand careful consideration from all market participants. Whether this represents a speculative bubble or a fundamental revaluation of monetary assets remains the central question that will determine investment outcomes in the coming months and years.
