As the Iran-Israel conflict intensifies and the United States deepens its involvement, global investors are once again turning to gold, not just as a traditional safe haven, but as a strategic, high-performing asset. The yellow metal’s appeal now goes beyond geopolitical uncertainty, underpinned by its growing role in diversified portfolios through gold-based funds and ETFs.
So far in the 2025 calendar year, gold mutual funds and ETFs have delivered an impressive average return of 29.11%, according to available data. Across the market, 32 gold-focused investment products—including both actively managed gold funds and passively tracked ETFs—have benefited from the surge in demand, proving gold’s dual advantage as both a hedge and a high-yield performer.
Gold prices have surged in recent times as a result of various global economic and geopolitical factors. Rising tensions worldwide—including conflicts in the Middle East and the implementation of Trump tariffs—have further boosted demand for gold as a safe-haven asset. In parallel, several nations such as China and India have been steadily increasing their gold reserves as part of a larger effort to diversify away from the US dollar and strengthen their financial security.
While global tensions have contributed to short-term price spikes, experts point to deeper, structural trends driving gold’s momentum. Central banks worldwide—particularly in China, India, Turkey, and Poland—have ramped up gold purchases, buying over 1,000 tonnes annually for three consecutive years. This buying spree was triggered by fears of asset seizures, following the freezing of $300 billion worth of Russian reserves in the wake of the Ukraine war.
“Gold is no longer just a crisis hedge,” says Shashank Udupa, former investment banker and Founder of Avalon Scenes. “It’s becoming a strategic asset class in itself. With over 50% cumulative returns across 2024 and 2025 so far, it’s outperformed many equity mutual funds.”
Geopolitical instability has further fueled the rally. “The Ukraine conflict alone drove a 10% jump in prices. Even minor escalations in the Middle East have been triggering 3–4% surges,” Udupa explains. Meanwhile, growing dedollarization efforts by BRICS nations are prompting central banks to view gold as the only neutral store of value.
Even institutions like Goldman Sachs have taken note, predicting gold could reach $4,000/oz by 2026.
However, volatility remains part of the narrative. Earlier this week, gold prices dipped Rs 900 in Delhi to Rs 98,900 per 10 grams after reports of a potential ceasefire between Iran and Israel reduced short-term safe-haven demand. According to the All India Sarafa Association, gold of 99.9% purity had closed at Rs 99,800 per 10 grams in the previous session. Meanwhile, gold of 99.5% purity fell Rs 800 to Rs 98,300.
Still, Udupa believes the long-term thesis remains intact. “While investors chase AI stocks and crypto trends, central banks are quietly backing the oldest currency in history. If your portfolio has zero exposure to gold in 2025, you’re likely missing one of the biggest shifts in global finance.”
With both performance and protection on its side, gold appears to be regaining not just relevance—but dominance—in today’s complex market landscape.