How much gold should you own? A simple 5-15% rule for Indian investors in October 2025

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Gold has had a blockbuster 2025, hitting new highs in rupee terms. Prices touched around Rs 13.2 lakh per 100g in mid-October before easing slightly, and domestic inflows into gold ETFs and funds have surged. Investors are once again turning to gold as the rupee remains weak, inflation stays sticky, and global uncertainties — from oil prices to trade tensions — keep risk sentiment on edge. For Indian households, gold isn’t just emotional security; it’s become a serious portfolio tool again.

The 5–15 percent rule of thumb

Most financial planners continue to recommend keeping 5-15 percent of your total portfolio in gold, depending on your risk profile. If you’re a high-risk, equity-heavy investor, 5 percent is enough to provide a hedge without hurting long-term returns. If you prefer balance or are nearing major life goals, 10-15 percent gives better protection against volatility and currency shocks. Going beyond that typically adds little benefit — gold stabilises returns, but it doesn’t grow wealth like equities.

Why the rupee’s weakness matters

For Indian investors, gold’s appeal often rises when the rupee weakens. The rupee has hovered near record lows — around Rs 88.8 per US dollar in October — making imported gold costlier and pushing domestic prices higher even when global rates are flat. That currency hedge is a big reason gold holds its place in diversified portfolios. In simple terms, gold tends to rise when the rupee and equities falter, cushioning overall returns.

Are Sovereign Gold Bonds still available?

Yes — but new tranches have slowed. The Sovereign Gold Bond (SGB) scheme remains valid for existing investors, and several older series are now reaching their redemption period. However, as of October 2025, the government hasn’t announced any fresh SGB issues for this financial year. The RBI is reviewing the scheme’s cost-benefit, and no official calendar is out yet. If you already own SGBs, you can continue holding them for their 2.5 percent annual interest and full capital-gains exemption on maturity. For new investors, though, gold ETFs or mutual funds are currently the main ways to invest in “financial gold.”

Choosing the right format

If you want liquidity and flexibility, gold ETFs are easy to buy through a Demat account and now trade with tighter bid-ask spreads thanks to record inflows this year. Gold mutual funds work for investors without a Demat account — they invest in underlying ETFs and allow SIPs. SGBs, when available, are ideal for long-term holding because of their tax-free redemption and interest income, but their availability is limited for now.

How taxes and timing affect your return

Gold ETFs and funds attract a 12.5 percent long-term capital gains tax (without indexation) if held for more than a year. SGBs, however, enjoy tax-free capital gains on redemption after 8 years, though the 2.5 percent annual interest is taxable. Physical gold remains least efficient due to GST and storage concerns. For most investors, mixing ETFs and SGBs (when available) achieves both liquidity and tax benefits.

How to make the allocation work for you

A practical way to apply the 5-15 percent rule is to start small and build gradually. For example, if your total portfolio is Rs 20 lakh, you could aim for Rs 1-2 lakh in gold depending on your risk tolerance. Don’t rush in after a sharp rally — stagger purchases via monthly SIPs or periodic buys. Rebalance once a year to ensure gold doesn’t exceed your target share as prices rise.

The bottom line

Gold continues to earn its place in Indian portfolios as a currency hedge and volatility shield. Even without new Sovereign Gold Bond issues, investors have plenty of ways to gain exposure through ETFs and mutual funds. The key is not chasing prices but keeping gold as 5-15 percent of your long-term mix, letting it quietly do its job — protect your wealth when everything else wobbles.