At Rs 1 lakh, is gold worth the splurge?

In a momentous milestone, gold prices in India have surged past the Rs 1 lakh per 10 gram mark, triggering awe, debate and fresh questions for investors. For a country where gold is far more than just an investment — deeply intertwined with festivals, weddings, and financial security — this psychological price barrier has rekindled the timeless debate: is gold still worth buying at these levels? At the same time, silver, often in gold’s shadow, is experiencing its own rally, driven by both industrial demand and traditional allure. So, with precious metals hitting new highs, what should investors make of the glitter?

Glorious run

Gold has long held its ground as a resilient wealth preserver. In 2000, the price of 10 gram stood at around Rs 4,400. Fast forward to 2025, and that number has skyrocketed to Rs 1 lakh — a remarkable 22-fold rise, yielding a compound annual growth rate (CAGR) of 11-12 per cent. This compares favourably with India’s equity indices such as the Sensex and Nifty, which, though offering slightly better long-term returns, have also weathered more volatility — from the 2008 financial crisis to the Covid-19 pandemic crash and the recent inflationary tremors.

Historical data from the RBI shows an even more compelling story. In 1970, gold was just Rs 184.96 per 10 gram in Mumbai. Over the past five decades, its price has jumped nearly 550 times, reinforcing gold’s ability to retain value across eras of change and uncertainty.

What’s fuelling the current rally

Several key factors have pushed gold to its all-time high levels:

Global economic uncertainty: Geopolitical tensions — from the Russia-Ukraine conflict to unrest in the West Asia — along with fears of a looming global recession, are driving investors toward the safety of gold.

Inflation hedge: With inflation proving to be sticky, gold has reasserted itself as a reliable store of value, protecting purchasing power over time.

Central bank buying: Nations like China, Russia and Turkey have been aggressively building gold reserves. In 2023, global central bank purchases of gold reached their highest level in more than 50 years.

Weakening US dollar: As interest rates taper and US fiscal deficits mount, the dollar has softened — giving gold, which moves inversely to the greenback, another boost.

India’s unshakeable obsession

India remains the world’s second-largest gold consumer, importing 700-900 tonnes annually. According to the World Gold Council, Indian households are estimated to hold over 25,000 tonnes of gold — a staggering figure, reflective of gold’s deep-rooted cultural, religious, and financial significance.

Even jewellers are optimistic. “The sudden rise in gold price will definitely have an impact on demand. However, once the shock gets absorbed, demand will stabilise,” says Rajesh Rokde, chairman of the All-India Gem and Jewellery Domestic Council. “Overall, there is a positive sentiment in the market, and we expect good consumer demand in the coming weeks.”

Retailers across India are observing an evolution in buyer preferences rather than a complete pullback. “We are seeing a shift in buying behaviour — more lightweight, modular designs and higher interest in digital gold and gold bonds,” explains a Chandigarh-based jeweller, requesting anonymity.

Still a golden investment?

Despite its lofty valuation, experts continue to view gold as a sound investment — but with caveats.

“Gold will always remain a core asset for Indian investors, especially considering its liquidity and ability to safeguard wealth over generations,” says Saksham Diwan, Assistant Vice-President, Wealth Management, Anand Rathi Wealth Ltd. However, he cautions against emotional buying in a bull market. “Investors should avoid rushing into gold purely due to the price surge, such as the recent one. It’s always better to allocate funds gradually.”

How to invest wisely now

With gold at record levels, here are some prudent approaches:

Asset allocation: Experts recommend allocating 10-15 per cent of your investment portfolio to gold.

Prefer digital routes: Sovereign Gold Bonds (SGBs), Gold ETFs and digital platforms offer ease, safety, and tax advantages compared to physical gold.

Stagger purchases: Much like Systematic Investment Plans (SIPs) in equities, spreading out your gold investments can help avoid buying at peaks.

Think long term: Gold works best as a long-term asset, providing stability and protection against economic shocks and currency volatility.

Silver’s moment under the sun

Silver, too, is riding a wave of demand — and not just for jewellery. Its industrial use in electronics, solar panels and electric vehicles (EVs) has made it an attractive investment option.

Despite rising prices, silver retains its appeal among both investors and festive buyers. Lightweight ornaments, silver coins and digital silver products have gained popularity as consumers look for more affordable alternatives to heavy jewellery. Moreover, silver ETFs are drawing attention from new-age investors looking for exposure to industrial commodities with a long-term upside.

The road ahead

Analysts predict that gold and silver may remain elevated in the coming years, thanks to continuing inflation, a slow global economic recovery, strong institutional buying, and geopolitical risks. While the massive growth seen over the past two decades may not repeat itself, both metals continue to offer compelling value as part of a diversified investment plan.

The last word

Gold at Rs 1 lakh per 10 gram may seem daunting — even surreal — but its appeal remains rooted in both emotion and economics. As long as inflation, uncertainty, and faith in tradition persist, the yellow metal will retain its shine in Indian households and portfolios alike.

For investors, the mantra is clear: be strategic, not impulsive. A diversified, disciplined approach using digital tools and staggered buying can ensure that even at these record highs, your gold investments remain truly priceless.