Buying Gold This Dhanteras? Experts Urge Caution Amid Market Volatility

Gold’s Rally Has Cooled, but Its Portfolio Role Remains in Focus

A sharp retreat from January’s peak has changed the near-term outlook, but the case for gold as a measured portfolio diversifier remains.

Why gold has lost momentum

After last year’s steep gains, profit-taking and the unwinding of speculative positions have contributed to a more unsettled market. Gold reached ₹1,74,638 per 10 grams on January 29, 2026, before closing at ₹1,43,552 on November 5, down 17.8% from that peak. The metal’s 8.2% gain year to date is therefore a subdued follow-up to its 74.9% return in 2025.

The conflict involving the United States, Israel and Iran pushed crude oil from around $60 to $110 a barrel, intensifying concerns that energy-led inflation could keep interest rates higher for longer. That has sometimes outweighed gold’s safe-haven appeal. Expectations of higher rates lifted bond yields, making a non-yielding asset less attractive, while a stronger dollar, moderation in central-bank purchases and intermittent ETF outflows have added pressure.

Structural support does not remove near-term risks

The long-term investment case has not disappeared. Experts point to concerns about government debt, diversification away from the dollar and central-bank buying as sources of potential support. Annual central-bank purchases of around 1,000 tonnes in recent years have helped underpin demand, while concerns that overseas reserves could be frozen through financial sanctions have encouraged some reserve diversification.

The path for oil, inflation and interest rates remains important. A lasting ceasefire could ease fears about oil supplies and inflation; if inflation moderates and the Federal Reserve cuts rates in 2027, lower yields and a weaker dollar could benefit gold. These are possibilities, not certainties. Supply constraints and persistently high energy prices could instead delay rate cuts and keep prices volatile over the next six to 12 months.

For Indian buyers, the rupee and the purpose of gold matter

Indian gold prices are influenced by both the metal’s international price and the rupee. The source notes that the rupee has generally lost around 3% to 4% against the dollar each year over the longer term; a weaker rupee can lift domestic gold prices even when dollar prices are flat. That currency exposure can help preserve purchasing power, but it does not prevent sharp short-term declines.

Gold can diversify a portfolio because its relationship with equities has historically been low or negative, potentially cushioning overall volatility. It also has no credit or default risk and can be sold when cash is needed. But it pays no interest, dividends or rent. Returns depend on price appreciation, can arrive unevenly and may lag growth assets for long stretches. Its role is therefore better understood as a potential store of value and shock absorber, not a substitute for a portfolio’s growth assets.

A measured approach can reduce timing risk

For existing holders, a slow year after a strong rally is not, by itself, a reason to abandon an allocation. Experts advise checking gold’s current share of the portfolio and rebalancing towards the intended target, rather than buying more because of last year’s gains or selling in disappointment. One adviser suggests a long-run expectation closer to high single-digit or low double-digit annual returns in rupee terms, not a repeat of the recent surge.

For new investors, the guidance cited is to keep gold at 5% to 10% of the total portfolio and maintain a five-to-10-year horizon. Gradual purchases through a monthly SIP in a gold fund or ETF can spread the entry point and avoid committing a lump sum after a rally. Jewellery should be assessed separately: making charges and resale deductions can reduce its value as an investment.

Key Highlights

• Gold is up 8.2% year to date after returning 74.9% in 2025.
• The November 5 close was 17.8% below the January 29 peak.
• Higher oil prices, inflation worries, bond yields and a stronger dollar have pressured prices.
• Central-bank demand and rupee weakness could offer longer-term support, but do not eliminate volatility.
• Experts favour a limited allocation, gradual buying and portfolio rebalancing over performance chasing.

Investor Note: Dhanteras buying need not be an all-or-nothing decision. Consider gold’s role in your overall asset allocation, your time horizon and the costs of the form you choose; short-term price swings make a concentrated or impulsive purchase harder to justify.