Gold as Insurance: Why Analysts Urge SIPs Amid Record Price Surge

On the global front, expectations of a prolonged US Federal Reserve rate-cut cycle have made non-yielding assets such as gold and silver more attractive.

Further, multiple rate cuts in 2025 by the Reserve Bank of India (RBI) Monetary Policy Committee (MPC), including a 25 basis point reduction in December, alongside concerns over rising sovereign debt and persistent geopolitical risks, have reinforced the safe-haven appeal of precious metals.

Amid the surging gold prices, Analysts believe that the gold should now be seen more as an "insurance policy" rather than a growth engine, and for the investment, they suggested to go for a Systematic Investment Plan (SIP) mode.

While speaking with ANI, Aamir Makda, Commodity & Currency Analyst, Choice Broking said, "Even at this record high level, Gold will still remain as a critical hedge for the Indian investors, however the role may shifted from Growth engine to insurance policy. While inflation has cooled slightly in late 2025, gold remains the most reliable way to protect your long-term purchasing power against the rising cost of living."

"Retail investors should vouch for the balanced approach in the asset allocation between Gold, Silver and Equities at this current stage. To optimize risk-adjusted returns, we would recommend making 8-12% allocation in Gold and 3-5% in Silver by investing in Gold and Silver ETFs respectively," Makda said.

Pranav Mer, Vice President, EBG - Commodity & Currency Research, JM Financial Services Ltd told ANI, "If anyone wants to start in SIP mode, every rate is a good price to start (as at corrections or rallies the average would fluctuate accordingly). In terms of portfolio diversification with Equities... we recommend 70% in equities, 15% in gold and 15% in silver."

Further, Jateen Trivedi, VP Research Commodity, LKP Securities said, "At elevated levels, gold continues to make sense as a portfolio hedge rather than a trading instrument. Retail investors should avoid lump-sum buying at highs and instead use SIP or staggered accumulation, maintaining gold allocation around 15-20%, and up to 25% during high-risk phases. Silver can be added tactically due to its higher volatility, while equities should remain part of the portfolio for long-term growth once risk appetite improves."

Talking about what the price surge tells about investor confidence in the broader economy, Jateen Trivedi said, "The sharp rally in gold and silver reflects heightened caution rather than optimism. Investors are pricing in slower global growth, policy uncertainty, and currency risk, preferring hard assets over financial ones."

"Such price behavior typically signals a defensive stance, indicating that confidence in macro stability remains fragile despite pockets of economic resilience," he added.

Aamir Makda of Choice Broking said, "This surge signifies an erosion of trust in fiat currencies, attributed to persistent inflation and unsustainable government debt. Central banks' gold accumulation suggests a move away from the dollar. The rise in precious metals reflects a risk-off sentiment among investors amid geopolitical tensions and serves as a hedge against stock market volatility."

- ANI