Gold rate today: Gold prices moderated a bit on Thursday following the much-expected Fed rate cut announcement of 25 basis points overnight and as traders turned cautious following the Federal Reserve’s guarded optimism regarding rate cuts for the remainder of 2025.
While the gold rate languished from an all-time high amidst hawkish tone and some profit booking, it quickly witnessed a sharp recovery. Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities, expects volatility to remain high in the gold rate, with profit booking at higher levels and strong buying support on dips. Gold range is seen between ₹1,07,500– ₹1,11,000 on MCX and $3,633 to $3,670 on the Comex.
The Fed chair Jerome Powell announced a 25bps cut and also kept on the table a probability for two more rate cuts in 2025. However, the probability for 2026 and 2027 was kept unchanged. Growth forecast was increased for 2026, and data-dependent dialogue continued.
Gold price outlook
Against this backdrop, investors might speculate whether buying gold is a lucrative option at the current juncture and the right mode of investment.
Gold could continue to trade with positive momentum from a medium-to-longer term perspective, said Manav Modi, Analyst – Precious Metal Research, Motilal Oswal Financial Services. However, some dips cannot be ruled out, post a sharp rally since the start of this year, he added.
The gold market bull run is in full speed with the prices up almost 40% this year alone, far beating returns given by the equity markets.
Physical gold vs gold ETF vs SGBs: Pros and cons
Amid a gold price outlook still strong, investors are spoilt for choice in the way they can invest in the precious metal. Physical gold, gold exchange-traded funds (ETFs) and sovereign gold bonds (SGBs) are among the popular ways to buy bullion in India.
Before deciding the better bet, here’s a look at the pros and cons of investing in each mode of gold.
Prathamesh Mallya, DVP Research – Non Agri Commodities and Currencies at Angel One, opined that in times of geopolitical uncertainty, gold as an asset class captures the risk premium and the safe-haven demand. It really does not depend on the modes of investment.
⦁ Physical gold demand is dependent on the need and the desire to hold the asset in physical form.
⦁ Gold ETFs are a digital and liquid way of accumulating gold even in smaller denominations, as they can be easily traded on the exchange, besides capturing the movement in gold prices in the international as well as domestic markets, noted Mallya.
⦁ SGBs stand out in one sense that if the investor holds the investment till maturity, the returns are exempt from tax besides capital appreciation; the investors also earn 2.5% interest every year (semi-annually), he added.
Taxation, as per him, is one of the key aspects of the investment in gold.
Sovereign Gold Bonds: The gains on SGBs redeemed on maturity are exempt from tax. Meanwhile, any gains on SGB redeemed after a period of five years is considered a long-term capital gain. Similar to physical gold, a 20% LTCG tax is applicable after indexation, along with a surcharge and 4% cess.
Physical Gold: If an investor sells a physical gold asset within 36 months of buying it, STCG is applied. If you sell them any later, the returns will be considered long-term capital gains. For STCG, the return from a gold sale is added to your annual income and taxes are charged as per your applicable income tax slab rate. LTCG investors of physical gold, have to bear 20% of the returns as taxes, with the addition of any surcharge if applicable. Moreover, a 4% cess also applies to these transactions, with indexation benefits. Lastly, you would also need to pay a Goods and Services Tax when buying physical gold.
Gold ETFs: The taxation of gold ETFs is the same as physical gold. Expense ratios are also a part and parcel of investments in ETFs and do eat a part of investor returns, Mallya added.
Final Verdict
According to the Angel One analyst, among all these modes of investments, SGBs stand out as a better option. Meanwhile, Modi opined that buying ETFs, physical gold, derivatives on MCX, digital gold and others are based on the investor’s risk profile and tenure of investment.
“ETF provides high liquidity and ease of trading; gold on MCX enables investors’ participation in the metal’s move from a short to medium term perspective. SGB was a good investment option; however, no fresh tranches have been launched, and only the secondary market is available for trading and investing, making it a risky bet in terms of overall liquidity,” he added.
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.