Gold Surges 245% in 4 Years: Experts Advise Portfolio Rebalancing Over Chasing Rally

Gold has delivered substantial returns over the past four years, rising from around $1,620 per ounce in late 2022 to nearly $5,595 at its peak in 2026. In India, domestic prices surged from roughly Rs 50,000-52,000 per 10 grams to as high as Rs 1.72 lakh earlier this year, aided by a weakening rupee.

Even after a recent correction, gold continues to trade around Rs 1.4 lakh per 10 grams. This has led many investors to question whether to buy more, hold, or book profits.

According to Arun Patel, Founder & Partner at Arunasset Investment Services, the decision should be based on portfolio balance rather than attempts to predict gold's next move. He advises against treating gold as an asset to exit simply because prices have risen. Instead, investors should assess whether gold now accounts for a larger share of their portfolio than originally intended.

"If gold was supposed to make up around 10 per cent of your portfolio but has grown to nearly 20 per cent because of the rally, it makes sense to book partial profits and rebalance," Patel explains. He emphasizes that gold is fundamentally a hedge, not a return-maximising asset. Its role is to protect wealth during uncertain times, not necessarily to outperform every year.

While global uncertainty, geopolitical tensions, inflation concerns, and currency weakness continue to support gold prices, Patel cautions against expecting another explosive run in the near term. Historical patterns show gold rarely moves in a straight line. After peaking in 2011, gold underperformed for several years. A similar correction of around 20-22 per cent followed the Covid-era rally in 2020 before the current bull run began.

The present cycle has already seen a sizeable correction: domestic gold prices fell from around Rs 1.72 lakh per 10 grams in January 2026 to nearly Rs 1.41 lakh, an 18 per cent decline. Based on previous cycles, Patel estimates an 80 per cent probability that gold could remain in a consolidation phase or witness further corrections over the next 12 to 18 months. This does not necessarily mean investors should sell, but expectations for quick gains should be tempered.

Regarding portfolio allocation, Patel says the ideal proportion depends on individual financial goals and risk appetite. Growth-oriented investors with a long horizon and significant equity exposure may need only 5-10 per cent in gold. Those seeking lower volatility or greater capital protection may consider 10-15 per cent. Allocations substantially higher may not be optimal, as gold does not generate earnings, dividends, or cash flows. Its value lies in preserving purchasing power and cushioning portfolios during financial stress.

Despite the warning against chasing prices, Patel advocates maintaining some gold exposure, citing structural factors such as persistent inflation, rising government debt across major economies, currency depreciation, geopolitical conflicts, and financial market uncertainty. These factors support gold's long-term relevance as a portfolio diversifier and hedge.