Gold has experienced a remarkable surge in the first quarter of 2025, with prices soaring nearly 25% year-to-date and reaching unprecedented levels on both the MCX and COMEX exchanges. This impressive growth can be attributed to escalating geopolitical tensions, particularly between the U.S. and China, along with a noticeable increase in demand for safe-haven assets from both institutional and retail investors. Experts suggest that the positive outlook for gold is likely to persist amid ongoing trade disputes, inflationary pressures, and active central bank purchases.

Continued Demand for Gold

The current market dynamics indicate that gold remains a favored asset for many investors. According to Navneet Damani, Group Senior Vice President at Motilal Oswal Financial Services, "In a climate rife with policy uncertainty and inflation, gold stands out as a safe haven. As central banks enhance their reserves and investors prioritize safety, we expect gold’s appeal to endure. Until there is a significant resolution to global trade conflicts, we recommend a ‘buy on dips’ strategy for medium to long-term investors."

Is Now the Right Time to Invest?

NS Ramaswamy, Head of Commodities at Ventura, offers a cautionary perspective on buying gold during its current upswing. He advises that potential buying opportunities may arise only through price corrections, with target levels around $3150 and $3080. He believes that while the medium-term outlook remains bullish, it’s crucial to approach the current rally with skepticism due to the likelihood of profit-taking and subsequent corrections.

• Short-Term Strategy: Focus on price corrections before making purchases.
• Medium-Term Potential: Prices could rise to $3450 to $3550 over the next 6 to 8 months.
• Overallocation Warning: Be cautious about over-investing in gold at these highs.

Risks of Buying at the Peak

Ross Maxwell, Global Strategy Operations Lead at VT Markets, echoes Ramaswamy’s caution. Buying gold at its peak can expose investors to potential corrections, especially given the current overbought conditions. He recommends a more strategic approach:

• Short-Term Approach: Wait for shallow pullbacks before entering the market.
• Long-Term Strategy: Consider dollar-cost averaging—purchasing smaller amounts over time to mitigate risk and capture better average pricing.

Final Thoughts

In light of the current market conditions, investing in gold can still be a sound strategy for those looking to preserve wealth or hedge against macroeconomic and geopolitical uncertainties. By adopting a disciplined buying approach, investors can navigate the complexities of the gold market while positioning themselves for potential future gains. Whether you’re a seasoned investor or new to gold, understanding the nuances of the market is key to making informed decisions.