Gold price remains volatile amid geopolitical tensions. What should be your portfolio diversification strategy?

Gold rate today: Precious metal saw a marginal downward trend on Tuesday on Donald Trump’s tariff tensions with China and the European Union, continued geopolitical instability from the Russia-Ukraine war, and investor caution ahead of the upcoming US Federal Reserve interest rate announcement.

On Multi Commodity Exchange (MCX), August gold futures declined by ₹308, or 0.31 per cent, to trade at ₹97,645 per 10 grams.

Gold prices in the international market experienced a slight decline on Tuesday, pulling back from nearly a four-week high. As of 0249 GMT, spot gold slipped 0.3% to $3,369.98 per ounce, after earlier reaching its highest point since May 8.

U.S. gold futures remained unchanged at $3,390. In the previous trading session, gold had surged around 2.7%, marking its strongest one-day increase in more than three weeks.

Gold as a portfolio diversifier

Gold as an asset has been a good diversifier in any portfolio for decades, according to market experts.

According to brokerage firm Angel One report, Gold demand and supply are inherent factors defining the volatility in the asset. The supply has been consistent around more than 4000 tons every year for more than the past decade.

Jewellery contributes more than 50% of the overall demand for gold historically and this trend has been similar for more than a decade. Central banks have been increasing their interest in the yellow metal since the covid-19.

Is it right time to invest in gold?

Prathamesh Mallya, DVP- Research, Non-Agri Commodities and Currencies, Angel One, believes that the ongoing trend in gold prices will likely continue in 2025, boosting the yellow metal prices for the second half of 2025.

Mallya further said that investors should wait for meaningful correction towards Rs.85000/10 gms for accumulation and recommends to allocate atleast 10 per cent of their portfolio allocation towards gold for better diversification.

“Gold prices have had a good run in the past one and half year as can be seen in the chart alongside. However, for investors with a long term perspective, they should accumulate on every dips taking benefit of value average for higher returns,” he said.

Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.