‘Expect 10-15% returns from gold, not 50%’: Invesco's Tahir Badshah says gold price rally may be losing steam

Gold rate today

Gold’s record-breaking rally may be nearing its peak, and investors must prepare for returns to cool to 10-15 percent annually, said Tahir Badshah, Chief Investment Officer at Invesco Mutual Fund. While the metal’s year-long surge has been fuelled by safe-haven demand, central bank accumulation, and trade tensions, Badshah expects annual returns to moderate sharply in the year ahead, a far cry from the outsized 30-50 percent gains witnessed in the recent past.

Spot gold climbed to a new all-time high of about $4,060 per ounce on Monday, extending its year-to-date rally to 54 percent. On the Multi Commodity Exchange (MCX), December gold futures rose over 1.6 percent to Rs 1,23,313 per 10 grams, while silver futures surged 3.4 percent to Rs 1,51,577 per kg. The metal has gained for eight straight weeks, buoyed by renewed U.S.-China trade tensions and expectations of further U.S. rate cuts.

Badshah, who oversees Invesco’s multi-asset strategy, said the rally has been heavily driven by central banks diversifying their foreign exchange reserves. “Gold now starts to probably form nearly about 35 percent of global reserves, and this has moved up from probably more like 10 odd percent in the last three odd years or so,” he told CNBC-TV18. With this diversification drive now reaching a “reasonably decent proportion,” he warned that the pace of official buying could taper off, limiting further upside.

He added that while gold remains an important part of diversified portfolios, its ability to outperform equities may now be constrained. “We are moving with an expectation that probably [gold] cannot outperform equities for the near term… maybe Indian equities on the headline index etc for about 10, 12, 15 odd percent. That’s what we are probably looking forward to from year on,” Badshah said.

Within Invesco’s multi-asset fund, about 20 percent of assets are invested in precious metals. However, the internal composition has shifted in favour of silver. “We moved a little more towards silver,” he said, explaining that the portfolio, which was almost entirely in gold a few months ago, now stands at roughly 12 percent in gold and 8 percent in silver.

Badshah maintained a constructive stance on precious metals but urged investors to moderate their expectations. With central bank demand plateauing and equity markets regaining traction, he suggested that gold’s next phase is likely to be one of stability rather than explosive growth.

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