Gold's 74% 2025 Surge Fuels 2026 Investment Bets

Gold's Historic Rally

Gold concluded 2025 with a staggering 74.7% absolute return, marking its boldest year in a decade. This surge was propelled by a confluence of factors including escalating geopolitical tensions between India and Pakistan, the anticipated impact of protectionist policies under a 'Trump 2.0' scenario, and rising global debt levels. Central banks also provided significant support, purchasing over 5,100 tonnes of gold in the last five years as part of reserve management strategies.

Earlier in 2024, gold had already gained 20.6% amid heightened global tensions and expectations of U.S. Federal Reserve rate cuts. The preceding years also saw consistent gains, with a 15.4% rise in 2023 driven by Middle East conflicts, and a 13.9% increase in 2022 following Russia's invasion of Ukraine. These performance figures highlight gold's consistent role as a hedge against inflation and a store of value during uncertain economic and political climates.

Investing Smartly: Funds vs. Physical

As the macroeconomic and geopolitical environment continues to favor gold, experts suggest gold funds as the most prudent investment avenue for 2026. These funds offer exposure to gold without the complexities of holding physical bullion. Gold Exchange Traded Funds (ETFs) aim to track domestic gold prices, requiring a demat and trading account for investment. They are backed by physical gold held in secure vaults.

Alternatively, Gold Savings Funds, structured as funds of funds, invest in underlying gold ETFs. They do not necessitate a demat account, simplifying the investment process and potentially reducing costs. Minimum investments can be as low as Rs 500, with Systematic Investment Plans (SIPs) available, making them accessible for regular, disciplined investing. Experts advise the SIP route, especially with gold prices near all-time highs, to benefit from rupee-cost averaging.

Top Funds for 2026

Focusing on funds with a minimum 10-year track record, three gold savings funds stand out for their robust performance and assets under management (AUM). These selections are based on data as of late 2025.

SBI Gold Fund: Launched in September 2011, this fund manages approximately ₹10,805 crore and boasts a direct plan expense ratio of just 0.10%. It has delivered a 10-year CAGR of 17.2%, holding 99.9% of its assets in the SBI Gold ETF. Raviprakash Sharma has managed the fund since its inception.

HDFC Gold ETF Fund of Fund: Established in January 2013, this scheme oversees assets exceeding ₹8,501 crore with an expense ratio of 0.18%. It has achieved a 10-year CAGR of 17.1%, mirroring the category average. The fund is invested 99.9% in the HDFC Gold ETF, co-managed by Nandita Mendez and Arun Agarwal.

Nippon India Gold Savings Fund: Introduced in March 2011, this fund, formerly Reliance Gold Savings Fund, manages assets around ₹4,849 crore with a direct plan expense ratio of 0.13%. It offers a 10-year CAGR of 17.0%, holding 99.9% in Nippon India Gold BeES, India's oldest gold ETF. Himanshu Mange currently manages the fund.

Strategic Allocation Advice

When considering gold investments for 2026, a long-term perspective of 5-10 years is crucial, acknowledging potential periods of flatness or volatility. The general recommendation is to allocate 5-10% of one's total investment portfolio to gold, aligning with risk profile and objectives. Consulting a SEBI-registered investment advisor is advisable for personalized guidance.