Gold’s strong run to continue as the global reset unfolds: Vikram Dhawan, Nippon India MF

Vikram Dhawan Head of Commodities & Fund Manager Nippon India Mutual Fund

Gold has crossed the $4,000 mark, after surging more than 50 percent in the past year. It’s among the best-performing assets right now.

But with prices at record highs, investors are asking  should they stay invested or book profits? Vikram Dhawan, Head of Commodities and Fund Manager at Nippon India Mutual Fund, which runs India’s largest gold ETF with an AUM of over Rs 30,000 crore, tells how this gold rally is different and if there is more room for upside.

Gold has delivered more than 50 percent returns over the past year. Do you think it’s time for investors to turn cautious, or is there still more room for upside?

We are witnessing a global reset among both investors and central banks. For several years now, central banks have been diversifying away from the dollar and into gold, and that trend is now visible among private investors as well.

For instance, in the Indian mutual fund ecosystem, gold and silver together account for less than 2 percent of total AUM. Globally, too, as recently as mid-last year, many institutional investors were underweight or held negligible exposure to gold.

This reset, moving back into gold, is still underway. And until it completes, we’re likely to see strong gold markets. Of course, nothing moves up in a straight line; there will be phases of consolidation and correction, but the underlying trend remains positive for the foreseeable future.

Have you seen a pick-up in gold ETF buying? How were September and October months for you?

If we look at the trend, flows into gold ETFs in 2024 were three to four times higher than in 2023. And for 2025, we’re only halfway through the financial year, but flows so far suggest this year could again be two to three times higher than 2024. So yes, we’re seeing an exponential rise in flows, which aligns with the larger reset I mentioned.

What’s your advice to investors who missed the rally? Is it still a good time to enter gold, or should they wait for a correction?

In India, asset allocation and multi-asset investing are still relatively new concepts. If you compare with Europe or the U.S., investors there allocate much more to diversified, multi-asset strategies.

In India, such funds still make up only about 2–3% of total AUM. As portfolios grow and investor awareness increases, the focus shifts from absolute returns to risk-adjusted or sustainable returns, and that’s where gold plays a key role.

So, even for those who missed the earlier rally, gold remains relevant as a portfolio diversifier.

How do you see upcoming U.S. Fed rate cuts and ongoing geopolitical tensions influencing gold prices in the next few months?

Interestingly, traditional macro factors like the U.S. dollar, bond yields, or Fed rates have become less dominant in this gold bull run. The drivers now are very different.

In the earlier bull market, before the 2008 financial crisis, prices were largely driven by macro trades and speculative flows. But this time, the dominant players are long-term investors.

That said, U.S. rate cuts still matter. The U.S. is running a fiscal deficit of nearly 7%, a level last seen during the COVID-19 or the 2008 crisis. If both fiscal and monetary policies remain accommodative, that creates a fertile ground for gold, and less so for the dollar.

There are several gold ETFs in the market, and their NAVs differ. How is the NAV of a gold ETF determined, and how should investors choose among them?

NAVs differ mainly because ETFs are launched at different times. A fund launched 10 years ago will naturally have a different NAV than one launched today; that’s not a performance indicator.

What investors should focus on is that, by SEBI regulation, gold ETFs must be fully backed by physical gold, with a maximum of 5 percent allowed in cash. In practice, funds hold 95–99 percent in physical gold.

So, if gold prices rise by X%, the ETF price will rise almost in tandem. The absolute NAV level doesn’t matter; the percentage movement does.

Digital gold allows investors to convert holdings into physical gold. Do ETFs offer that option?

As per SEBI rules, only investors with a minimum ticket size of Rs 25 crore can directly approach the fund house for redemption in physical gold.

But the key difference is that ETFs are SEBI-regulated, while digital gold isn’t. That means investor grievances are handled within a defined regulatory framework. You don’t have to chase your money or lodge external complaints. SEBI’s mandate is investor protection, especially for retail investors, and that’s what sets ETFs apart from unregulated products.

Let’s also talk about silver. It has grown more than gold in the past year. Between gold and silver, which looks more attractive from a valuation standpoint?

Both have different drivers. Gold is largely a hedge against global debt. Total sovereign debt has now crossed $100 trillion, and total world debt is around $350 trillion, about 3.5 times global GDP. Gold, being free of credit risk, acts as an antidote to this rising debt burden.

Silver, on the other hand, is driven by industrial demand, particularly from the renewable energy sector. About 15–20 percent of global silver demand now comes from solar energy applications. So, while gold’s momentum is macroeconomic, silver’s is structural as tied to green energy and climate transition.

Finally, investors today have multiple gold investment options -SGBs, digital gold, mutual fund FoFs, and ETFs. How should they choose?

It depends on your objective. If you’re focused on wealth creation through capital markets, gold ETFs check all the boxes. They’re regulated, liquid, safe, and easily accessible through investment apps.

If your purpose is more consumption-oriented, like buying gold for jewellery or gifting, then physical gold, SGBs, or digital gold may make sense.

However, remember that SGBs and digital gold are less liquid, so they may not provide an effective hedge during market stress, especially for larger portfolios. So, choose based on your financial goal.