One of the conventional rules of investing suggests allocating around 80–85% of a portfolio to equities and the remaining 15–20% to gold.
However, given gold’s stellar returns over the past year and the relatively muted performance of the Indian stock market, investors are now grappling with whether they should increase their gold exposure beyond the standard 20%.
Stock market benchmark Sensex has crashed nearly 9% from its record high of 86159, which it scaled on December 1 last year. The ongoing US-Iran war, surge in crude oil prices, FII selling, and rupee fall to a record low against the dollar indicate the market may see more corrections in the near term. So, is it better to buy more gold?
Gold looks poised for healthy gains
Conflict in the Middle East and its potential impact on the growth-inflation dynamics of the world due to a sharp rise in crude oil prices indicate gold could stay on an upward trajectory in the near term.
Even for the long term, gold has a key catalyst in terms of aggressive buying by the Chinese central bank.
The People’s Bank of China (PBOC) bought gold for the 15th consecutive month in January. According to media reports, the PBOC holds over 2,300 tons of gold as of February 2026.
“The buying of gold by China will offer good support to gold prices, though a more sustained support is likely to come from expected depreciation in the US dollar against currency majors. The demand for gold from China is also due to the implied intention to accumulate it as an alternative to the dollar in the light of the emerging global economic realities,” Joseph Thomas. Head of Research at Emkay Wealth noted.
Experts underscore a structural pivot in the global monetary order. They point out that gold has moved beyond its role as a commodity to become the premier sanction-resistant sovereign reserve. Unlike fiat-based instruments, gold carries zero counterparty risk and provides absolute financial autonomy.
“China’s relentless accumulation of physical gold, mirrored by its tactical reduction in US Treasury exposure—which hit a 17-year low of $682.6 billion in early 2026—reflects a strategic imperative rather than a cyclical trade. It signals a fundamental loss of confidence in the ‘risk-free’ status of paper-denominated assets in an era of fiscal dominance and weaponised finance. In this fragmenting landscape, gold is being remonetised,” said Ravinder Kumar, Senior Research Analyst at SMC Global Securities.
Time to increase exposure to gold?
Increasing gold allocation beyond 20% depends on one’s risk profile and overall portfolio structure. However, many experts believe the current market structure favours the view of increasing gold exposure.
According to Renisha Chainani, the head of research at Augmont, in the current environment of rising geopolitical tensions, elevated global debt, currency debasement risks, and policy uncertainty, gold’s role as a strategic hedge has strengthened.
Chainani said if one’s portfolio is heavily exposed to equities and global risk assets, raising gold slightly above 20% may improve resilience.
That said, Chainani added that going significantly higher can reduce long-term growth potential, as gold does not generate income.
A balanced approach would be to gradually increase allocation on corrections rather than making aggressive lump-sum shifts, ensuring diversification remains intact, said Chainani.
Archit Doshi, Senior Vice President at PL AMC, said one can consider investing 20-25% of investible capital in , given the current macroeconomic paradigm.
“The strategic allocation to gold must be elevated to the 20-25% threshold to act as a critical macroeconomic hedge against the ongoing geopolitical uncertainties,” said Doshi.
“As global crude oil prices hover currently around $80 per barrel and are expected to rise higher than these levels, the Indian rupee faces severe depreciation pressures, which inherently magnifies the domestic returns of dollar-denominated assets like gold,” Doshi said.
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