Gold’s Brilliant Rally: 6 Ways for Retail Investors to Join the Diwali Rally After Surging 51% YTD

As Diwali 2025 approaches, gold – traditionally a favorite asset during the festive season – is making headlines not only for its auspicious symbolism but also for its unprecedented price appreciation. With prices up more than 51% this year, gold’s rally has become both a celebration and a concern, especially for retail investors who now find the safe haven increasingly unaffordable in physical form.

Against this backdrop, leading market analysts caution investors against blindly chasing the rally and urge them to explore a wider range of instruments that allow participation without burning a hole in the pocket.

Gold’s performance in 2025 has been underpinned by a convergence of macroeconomic and geopolitical factors, chief among them expectations for US interest rate cuts, a weaker dollar, record central bank purchasing and global tensions.

According to Renisha Chainani, head of research at Augmont, “Gold prices have already risen over 50% this year, and the momentum is likely to remain solid through the festive season… On the MCX, gold could be around Rs 1,20,000 – Rs 1,22,000 per 10 grams by Diwali… and possibly rise to Rs 1,25,000 – Rs 1,28,000 by year-end.”

Ross Maxwell, Global Strategy Lead at VT Markets, attributes the rally to “a weaker USD, expectations of lower interest rates, strong central bank demand and geopolitical uncertainty.”

However, he warns that “maintaining current momentum will be difficult, especially as we could see some gains around the key psychological level of $4,000/oz.”

How can investors still participate in the gold rally?

As physical gold becomes unaffordable, retail investors still have a range of modern and cost-effective alternatives that provide exposure to gold without the burden of storage or high capital expenditure. These are the options discussed by the analysts:

1. Gold ETFs

Gold Exchange-Traded Funds offer liquidity, transparency and the convenience of trading like stocks. Chainani points out that they “provide liquidity, transparency and ease of trading.” Ross Maxwell also highlights ETFs like SPDR GLD, saying they “offer good, strong liquidity and low fees.”

2. Digital gold

Ideal for micro-investors, digital gold makes it possible to buy even a fraction of a gram. It offers 24K purity and assured storage, according to Chainani. These platforms are particularly suitable for systematic investing.

3. Gold mutual funds

For those who prefer managed exposure, mutual funds that invest in gold assets are a viable option. These are suitable for investors without a demat account and offer the benefit of professional fund management.

Also read: Why Goldman Sachs sees more upside in gold as it raises its target to $4,900 by 2026?

4. Physical gold – coins and bars

Still popular for traditional reasons, Chainani acknowledges that “physical gold coins or bars are preferred by festive buyers for favorable and emotional reasons.” Retail investors can buy these online or offline from trusted dealers.

5. Futures and options

For experienced investors, gold futures and options offer leveraged exposure. Ross Maxwell suggests: “More experienced investors can explore futures, options or CFDs for leverage exposure.

6. Gold mining stocks

Investors looking for higher but riskier returns can consider gold mining companies. Ross Maxwell notes that these “can also be used for potentially higher but riskier returns.

Diwali Outlook: What’s in store for gold prices?

While analysts agree that gold’s fundamentals remain strong, there is also consensus on the need for a cautious approach.

Jashan Arora, director of Master Trust Group, believes the rally is rooted in “aggressive gold accumulation by central banks around the world… supported by expectations of possible rate cuts and continued geopolitical uncertainty.”

He sees continued momentum through the holidays and into the final months of the year.

Ross Maxwell tempers optimism with a note of caution, saying: “The price could continue higher if Fed commentary turns dovish or geopolitical risks increase. However, a stronger USD or higher real rates could lead to a 5 to 10% decline in the near term.”

In her closing advice, Chainani suggests: “Investors should take a diversified approach rather than chasing prices at record highs. Accumulating corrections or through systematic investment options helps average costs.”

As India celebrates the Festival of Lights, investors are reminded that gold, while promising and lucrative, must be approached with strategy and discipline. Wise allocation, diversification across instruments and dollar-cost averaging can help investors capture the upside and protect themselves from volatility.

To quote Ross Maxwell, “Disciplined position sizing and volatility awareness are essential to achieving profits while managing risk.”

Also read: Gold shatters all records, surpasses Rs 1.22 lakh/10 grams. Should you buy more or book a profit?

(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times)