Gold rate skyrockets 115% in a year: Is yellow metal headed for a deep correction as gains fuel bubble concerns?

Gold prices are skyrocketing. Over the last year, the gold rate in India has soared by over ₹93,000, or about 115%, per 10 grams. In January so far (till the 29th), it has jumped by over ₹42,000, or more than 32%, per 10 grams.

While geopolitical uncertainties, the dollar’s weakness, US Fed rate cuts, aggressive central bank buying, and strong retail demand have driven the precious metal to unprecedented levels, the sharp gains have raised the question of whether the yellow metal has entered bubble territory.

Is gold in bubble territory?

Some experts say the metal may be ripe for profit booking at this juncture.

Their assumption is based on the historical fact that assets that move far above their long-term trend see some profit-taking or consolidation, which is healthy rather than alarming.

Vandana Bharti, the head of commodities research at SMC Global Securities, believes gold has entered a state of overheated euphoria.

“The sheer velocity of this ‘rocket rally’ warrants caution for the immediate term. We are already seeing the friction points of such a rapid ascent, including hiked margins and disruptions in the physical coin market, which could gradually dry up trading volumes,” said Bharti.

Bharti pointed out that the logistical strain on ETFs—which must back their shares with physical metal held in vaults—could lead to further suspensions of buying facilities in 2026 if supply cannot keep pace.

“Given these dynamics, the current entry point carries high risk for new capital. While gold and silver appear to be establishing a higher long-term consolidation zone, the speculative froth is likely to cool down,” said Bharti.

Manish Srivastava, Executive Director of Anand Rathi Wealth Limited, pointed out the historical trend that years of extraordinary growth are usually followed by periods of correction or stagnation.

“Gold’s nearly 120% climb and silver’s 320% rise since 2025 both represent exceptional, unsustainable moves that deviate from the long-term trends. This does not necessarily mean we are in bubble territory, but investors can safely assume that upside is limited, while the risk of increased volatility and a cooling-off year remains high,” said Srivastava.

However, Anindya Banerjee, the head of currency and commodity research at Kotak Securities, believes the yellow metal is not in a bubble territory as he sees a larger monetary reset underway and gold reclaiming the reserve-currency premium.

“Rapid de-dollarisation and de-globalisation are dismantling the post-Bretton Woods monetary order. What the market is witnessing today is not speculative froth. It is the visible expression of a much larger monetary reset already underway,” said Banerjee.

“This is a repricing of money itself. Gold and silver—the original, time-tested forms of money—are reclaiming the reserve-currency premium long monopolised by fiat currencies, most notably the US dollar,” Banerjee said.

Banerjee highlighted that capital is moving toward bullion as protection against escalating risks of currency debasement by central banks, confiscation risk, capital controls, and financial repression by governments, which fiat systems can no longer conceal.

Banerjee said what markets are pricing today is not a gold and silver bubble, but the early deflation of a fiat currency bubble, with value forcefully migrating back into real money, which is bullion.

Riya Singh, a research analyst for commodities and currency at Emkay Global Financial Services, said investors should expect volatility and may consider partial profit-booking, especially if positions have become disproportionately large within portfolios, but labelling the current move as a classic bubble risks missing the structural shifts underpinning this cycle.

“Rising U.S. debt, persistent fiscal deficits, fragmentation of global trade, and growing questions around the long-term neutrality of reserve currencies have repositioned gold from a crisis hedge to a core monetary asset,” said Singh.

Is it the right time to buy gold?

According to Bharti of SMC Global, for investors who are currently holding positions, partial profit-booking is a prudent strategy to navigate the potential volatility.

“The long-term trajectory remains bullish due to the widening supply-demand gap and macroeconomic shifts, but the market needs time to digest these gains and build a sustainable base before the next leg up,” said Bharti.

Banerjee believes gold and silver deserve to remain core strategic holdings, not tactical trades.

“A portfolio allocation of 25–30% remains appropriate. Volatility will be violent. Corrections of 10–15% in gold and 25–30% in silver are not only possible—they are inevitable,” said Banerjee.

He, however, was quick to add that these are accumulation windows, not exit signals.

“This is not the end of the move. This is the opening act of a long, structural, and irreversible monetary reset,” Banerjee said.

According to Srivastava, the best strategy for investors is to avoid chasing momentum after such a massive rally.

He says equities should remain the foundation of long-term wealth generation.

“Gold serves its purpose as a portfolio stabiliser, ideally kept within a combined 20% allocation alongside debt. Silver has proved to be too volatile to hold a permanent place in a long-term portfolio. Investors are advised to stick to their asset allocation, rebalance if applicable and avoid reacting to short-term price movements,” said Srivastava.

According to Singh, the broader trend appears less like speculative excess and more like a repricing under a new monetary and geopolitical regime.

“For long-term investors, dips are likely to be opportunities rather than signals to exit entirely, while disciplined profit-taking should be viewed as portfolio management, not a bearish call on the metals themselves,” said Singh.

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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.