Gold Gains Traction Amid Market Volatility, but Institutional Investors Remain Cautious
Despite a surge in interest in gold as a safe-haven asset, institutional investors, particularly family offices, are still hesitant to allocate more than 1% of their portfolios to the precious metal.
GoldMarket VolatilityInstitutional InvestorsSafehaven AssetsGold PricesReal Estate NewsMay 25, 2025
Family offices allocate nearly 1% of their portfolios to gold and precious metals, which is on par with niche assets like art, antiques, and infrastructure. This allocation is significantly lower compared to other asset classes such as private equity, real estate, and cash, the report states after analyzing the global markets.
Gold has gained significant attention in recent months due to the instability arising from trade tensions. However, gold prices fell recently after a sharp rise from January to April 2025, when the yellow metal rallied by 25%. The drop in prices reflects reduced worries regarding the trade war and the safe-haven appeal of the asset, the report states.
Data published by the World Gold Council, despite being delayed, indicates the primary sources of gold demand for the first quarter of 2025. The demand for investment-related gold surged by 170% on a year-on-year basis in the first quarter of 2025, highlighting the rally during this period as investors preferred the yellow metal amid uncertainties over Donald Trump's trade policies and an escalating trade war with China.
With the 90-day pause on sweeping tariffs imposed by China and the US, the demand for gold has reduced, leading to a drop in prices. In Indian markets, the MCX gold prices stood at ₹96,400/10 gm at 11 am on Sunday, May 25, according to the official website. Meanwhile, 24-carat gold was priced at ₹96,860/10 gm, according to data on the Indian Bullion Association (IBA) at 11 am on May 25, while 22-carat gold was priced at ₹88,788/10 gms.
Gold imports have decreased sequentially. In April, the country imported USD 3.1 billion of gold, down from USD 4.5 billion in March, indicating reduced jewellery demand due to high prices.
Frequently Asked Questions
Why are institutional investors hesitant to invest in gold?
Institutional investors, particularly family offices, are hesitant to invest in gold due to its relatively low allocation in their portfolios, favoring other asset classes such as private equity, real estate, and cash.
What factors have contributed to the recent surge in gold prices?
The recent surge in gold prices has been driven by trade tensions and uncertainties over Donald Trump's trade policies and an escalating trade war with China, making gold a preferred safe-haven asset.
How has the demand for investment-related gold changed in the first quarter of 2025?
The demand for investment-related gold surged by 170% on a year-on-year basis in the first quarter of 2025, reflecting the increased interest in gold as a safe-haven asset during periods of market uncertainty.
What is the current price of gold in Indian markets?
In Indian markets, the MCX gold prices stood at ₹96,400/10 gm at 11 am on Sunday, May 25, while 24-carat gold was priced at ₹96,860/10 gm, and 22-carat gold was priced at ₹88,788/10 gms.
How have gold imports in India changed recently?
Gold imports in India have decreased sequentially, with the country importing USD 3.1 billion of gold in April, down from USD 4.5 billion in March, indicating reduced jewellery demand due to high prices.
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