Gold Has a Golden History, But Will It Have a Shining Future?

There’s one metal that is historic, timeless and valuable. Yet not rare like diamond, or cheap like bronze. Gold has been around for a long time. The fascination with this precious metal can be traced back to ancient times, with evidence of its use dating as far back as the Indus Valley Civilisation (2600-1900 BCE).

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Beyond its cultural and ornamental significance, gold has long held an important role in personal finance, serving as a hedge against inflation and economic uncertainty.

But is it still a smart choice in 2025? Let’s take a closer look at its historical performance, how it holds up during economic downturns, and whether it’s worth adding to your portfolio now.

Gold Prices Over Last  25 Years

Gold’s value has steadily increased over the years, proving to be a reliable investment. Here’s a look at how its price has changed in India over the past 25 years:

Chart of Average Gold Price in India per 10 gram from 2000 to 2025

Gold as a Safe Investment in Economic Crises

Gold has always been seen as a safe bet during uncertain times. When the economy starts looking shaky, people turn to gold to protect their wealth and hedge against inflation. 

Take the recent surge in gold ETFs as an example , driven by economic uncertainty, trade tensions, central bank rate cuts and weakening of the US dollar.

But why does gold gain so much attention during downturns? 

Well, when economies slow down, good investment options shrink, and gold stands out as a reliable choice. When currencies weaken and stock markets drop, investors shift their focus to gold—and history proves it.

Here are three major times when gold prices hit record highs due to economic crises and falling currencies.

1. The 2008 Financial Crisis

The 2008 financial crisis sent shockwaves through global markets, wiping out trillions in wealth. But while the Indian benchmark indices including the S&P BSE Sensex, crumbled by over 50% between January 2008 and February 2009, gold did what it does best—hold its ground.

In fact, the average price of 24-karat gold in India rose from approximately ₹12,500 per 10 grams in 2008 to around ₹14,500 per 10 grams in 2009. That’s around 16%.

Investors around the world, desperate for safe investments, poured their money into gold. 

In India and beyond, gold prices surged sharply, proving once again that in times of crisis, gold isn’t just an investment; it’s financial insurance.

2. Covid-19 Pandemic  

When the Covid-19 swept across the world, businesses struggled, and job markets took a hit. As a result, investors turned to gold for safety, and gold prices in India skyrocketed.

In just a year, the average price of 24-carat gold surged from ₹35,220 per 10 grams in 2019 to ₹48,651 in 2020—a massive 38% increase. Plus, with the Indian government keeping bond yields low, gold became an even more attractive investment.

3. Russia-Ukraine Conflict (2022)

When Russia invaded Ukraine on February 24, 2022, the world was thrown into uncertainty—and once again gold prices shot up. In India, they jumped from ₹50,180 to ₹51,550 per 10 grams almost overnight.

On top of that, global sanctions on Russia disrupted trade and weakened major currencies, pushing even more people toward gold. With central banks raising interest rates and inflation creeping up, gold proved once again that it’s the go-to asset when uncertainty hits.

Gold vs Other Investments

The stock market may have had its winning streaks, but there were clear moments when gold outshined everything else. During major economic upheavals—like the 2008 financial crisis and the COVID-19 pandemic—gold didn’t just hold its value; it soared. 

Here’s Gold’s Performance against the NIFTY 50 over the past 25 years

What’s Driving Gold Prices in 2025?

As of March 13, 2025, gold prices reached unprecedented levels at approximately ₹89,105.00 per 10 grams. Gold ETFs saw continued inflows during February for the third consecutive month, lifting total AUM and collective holdings by 4.1% and 3.1% respectively. Investors poured $9.4 billion, the strongest since March 2022. The AUM stood at $306 billion, while holdings rose to 3,353 tonnes, the highest month-end level since July 2023.

Net assets under management of gold ETFs stood at a record Rs 55,677 crore last month. It is to be noted that the AUM also reflects the appreciation in prices. The AUM has jumped 51% year-on-year as investors remained hitched to the proxy and tax-efficient way of investing in gold, without the need of physically storing it.

So What’s the Future of Gold?

Gold prices in India are set to stay high in 2025, thanks to a mix of global and domestic factors. While soaring prices might dampen jewelry demand, the investment appeal remains strong as both individuals and institutions seek a safe-haven asset in uncertain economic times.

For those eyeing gold as an investment, keeping tabs on global economic trends, central bank policies, and geopolitical shifts will be key to making smart decisions.

Here’s something even more interesting—February saw a repo rate cut. Looking back at the past five rate cut cycles, gold has consistently outperformed Nifty 50 in the following year—but only when the rate cut was in response to an economic slowdown rather than a full-blown financial crisis.

Central Banks are Buying more Gold 

India, China, and Japan have been aggressively increasing their gold reserves. Since 2009, central banks worldwide have been adding around 400 metric tonnes of gold annually. Over the past five years alone:

• China: +316 MT
• India: +235 MT
• Japan: +81 MT

Their goal? Reduce reliance on the US dollar and strengthen financial stability. This growing demand from central banks is a big reason why gold prices keep climbing.

Geopolitical Tensions might not just end soon: 

The world isn’t exactly a peaceful place right now.

The Russia-Ukraine war is still dragging on, causing uncertainty in energy markets and driving inflation. At the same time, U.S.-China trade tensions are heating up, with new tariffs adding pressure to the global economy. 

Closer to home, China’s expanding naval presence is making countries like India and Japan uneasy. Meanwhile, China, Iran, and Russia recently held joint naval drills in the Gulf of Oman, adding to military tensions.

In Europe, the EU is ramping up defense spending, preparing for potential conflicts, while violent protests in Africa over the M23 rebel advances in the Democratic Republic of the Congo have sparked further instability. 

All of this uncertainty pushes investors toward gold, reinforcing its status as a hedge against inflation and economic downturns.

So, if history is any indication, gold could be gearing up for another winning year!

Should You Invest in Gold?

Before diving in, it’s important to note that this blog is not financial advice—just an insight into gold’s role as an investment. If you’re considering adding gold to your portfolio, it’s best to consult a financial advisor to ensure it aligns with your financial goals. 

That said, here are some Pros and Cons of Investing in Gold.

Pros 

1. Gold moves independently from stocks, reducing overall risk.
2. Gold is a hedge against inflation & currency devaluation.
3. Gold retains value during economic fluctuations.
4. Easily bought and sold worldwide for quick access to funds.

Cons 

1. Unlike stocks or bonds, gold doesn’t generate dividends or interest.
2. Physical gold requires safekeeping, which can add extra costs.
3. Gold prices can be unpredictable and influenced by global factors.

The Bottom Line: Is Gold Still a Smart Investment?

If you’re looking for quick profits, gold may not be the best bet—it doesn’t generate passive income like stocks or bonds. However, if you want stability, a hedge against inflation, and a crisis-proof asset, gold still shines bright in 2025.

With record-high prices, strong central bank demand, and growing geopolitical uncertainty, gold remains a valuable addition to a diversified investment portfolio. 

The key is balance—don’t put all your money in gold, but don’t ignore its long-term security either.

So, will gold keep shining? If history has taught us anything, it’s that gold may lose its luster for a while, but it never fades away. If you’re investing for the long haul, gold deserves a place in your financial strategy.