Gold has earned 139% in three years, should one invest now?

The trend of rising gold prices that started with the beginning of the Covid pandemic will continue till the end of the year 2025. During this period, gold has earned a lot of money for investors. If we talk about the current year, gold has given returns to investors not just 50 but more than 60 percent. On the other hand, even though the stock market has crossed the record level of last year, it has not yet reached double digits in terms of giving returns.

According to MCX, the price of gold has increased by about 7.5 percent in the last one month, from Rs 1,19,289 per 10 grams on November 5, 2025 to Rs 1,28,221 per 10 grams on December 5, 2025. Similarly, if we examine the absolute return data for 1, 2 and 3 years, gold prices have seen a growth of 70 per cent, 105 per cent and 139 per cent respectively. This means that Rs 1 lakh invested in gold three years ago has now become approximately Rs 2.39 lakh.

Given the excellent returns over the past few years, investors are wondering whether gold prices have reached their peak. Is it a risky time to invest in gold, or does the yellow metal still have some steam left in it? What type of gold should you invest in? Should you invest a lump sum or spread it over time? Let us also tell you what is the opinion of experts on this front?

When should an investor invest in gold?

Aksha Kamboj, vice president of India Bullion and Jewelers Association (IBJA) and executive chairperson of Aspect Global Ventures, says in a media report that the long-term basic structure of gold remains stable and one should invest in it during the fall.

Kamboj said that inflation risks, tensions in geopolitical zones and accumulation by the central bank, all these are in favor of gold. The better way is to invest in gold not when it is at its peak but at the time of its decline. “Rather than expecting huge increases in short-term gains, bullion should be held in a diversified portfolio.”

Navneet Damani, Head of Commodities Research, Motilal Oswal Financial Services Limited, has advised investors to start accumulating gold gradually and increase investment if prices improve further. They consider it a strategy to buy on dips.

By looking at the value of gold given above, you can guess that in the last 10 years this yellow metal has given returns of more than 400 percent. Samit Guha, MD and CEO of MMTC-PAMP, considers this a strong investment opportunity. Guha says gold is a safe investment and should be considered for long-term wealth creation as historical data shows an upward trend in gold prices.

Why are gold prices increasing?

However, the big question is whether this rise in gold prices will continue for a long time? Apart from its historical record, what other factors can cause the rise in gold prices? Guha says that the major reasons for the rise in gold prices in the future will include fluctuations in the interest rate policies of the US Federal Reserve, changes in real yields, strength of the US dollar, purchases by central banks and geopolitical tensions. Guha says that although rising real yields may put pressure on gold prices in the short term, continued demand from central banks and geopolitical uncertainty strengthen gold as a safe investment asset.

What should be the ratio of gold in the portfolio?

Gold is considered a good option for diversifying the investment portfolio along with equity, debt, bonds and other assets. Assuming that the price of gold will continue to rise in the future, what is the ideal proportion of the yellow metal one should keep in their portfolio? According to Damani, given the current scenario of rising geopolitical risks, slow global growth and changing interest rate cycles, conservative investors should keep 8-12 per cent of their investment portfolio in gold.

Damani says an aggressive investor should keep 5-8 percent of his investment portfolio in gold. Aggressive portfolios typically rely more on equities, but a meaningful gold allocation helps balance downside risk, especially in times of high uncertainty.

In which form of gold should one invest?

When it comes to choosing gold for investment, investors are often confused about choosing the right form of gold – physical, digital, mutual fund or exchange-traded fund (ETF). Some gold is good for jewelery and some for investment. Guha says consumers should be judicious about the type of gold they are buying.

Physical gold products like 999.9+ purity 24 karat gold coins and bars are suitable for social and traditional occasions. Gold jewelery retains emotional and decorative appeal, but there is a 10-12 per cent making charge on it. Gold ETFs and Sovereign Gold Bonds are suitable for long-term investors due to cost effectiveness, liquidity, tax benefits and ease of management. Guha also says that before investing in gold, the investor should take advice from a financial professional.

SIP or lump sum? how to invest in gold

Talking about any type of investment, an investor generally has two options: lump sum and SIP. For investors who have a large sum of money, lump sum investment can be a good strategy, while investors with fixed monthly income may find it easier to invest through SIP.

Damani says in the ET report that fixed SIP can be the best option as it removes the pressure of market time line. Damani says lump sum investment is suitable only for people who have a long-term vision and who strongly believe that current prices are well below the long-term value of gold.

According to Guha, SIP, or periodic purchases, with opportunistic accumulation during downturns, is an effective strategy. He says that this approach keeps the buying cost average. Reduces time line risk, and enables disciplined fund generation over time. Lump sum investment involves timing risk and is better for investors who believe in timing the markets or who have a large sum to spend at one go.