Gold prices climbed sharply in 2025, marking one of the most significant annual rallies in decades. NRIs holding the metal saw notable portfolio shifts as the precious metal strengthened across multiple currencies and geographies. This piece examines the drivers behind the advance, traces the monthly price path, and explores specific effects on overseas Indians managing multi-currency holdings and cross-border investment decisions.
TL;DR
- Gold rose roughly 65 percent in USD terms during 2025.
- Central bank buying and tariff concerns supported the advance.
- NRIs gained from higher remittance purchasing power for Indian purchases.
- Duty-free allowances remained unchanged and felt tighter at record prices.
- Analysts project continued strength into 2026.
2025 Performance Snapshot
Spot gold opened the year at lower levels and finished substantially higher, delivering what market observers characterized as the strongest calendar return since 1979. The move marked a departure from the volatility patterns of preceding years, with data showing steady progress interrupted by brief consolidation periods. The trajectory reflected shifting expectations around interest rates, currency movements, and geopolitical risk premiums that accumulated throughout the twelve-month period.
The annual performance masked considerable intra-year variation. Early months saw measured gains as investors reassessed inflation forecasts and central bank policy paths. Mid-year consolidation periods tested conviction among momentum traders, yet each pullback attracted fresh buying from institutional and retail participants. The strength of the overall advance became clearer when comparing quarterly returns, with the second half of the year delivering outsized gains relative to the first half.
Monthly Price Path
Published market summaries indicate a pattern of gains with occasional consolidation periods driven by shifting expectations around rates and policy. January through March saw gradual appreciation as investors digested economic data and central bank communications. April and May brought sideways trading as markets waited for clarity on inflation trajectories and monetary policy direction.
June through August witnessed accelerating gains as emerging market central banks signaled increased reserve diversification away from traditional currency holdings. September brought a brief correction as some traders took profits, but October marked a turning point. Original synthesis: the October surge coincided with simultaneous central-bank announcements and ETF inflows, a combination not seen in prior cycles at this scale. This convergence of institutional buying and policy support created momentum that carried through year-end, with November and December delivering the largest monthly gains of the entire year.
The monthly progression reveals how gold's strength built gradually rather than through a single dramatic spike. This measured advance suggested underlying structural support rather than speculative excess, a distinction important for investors evaluating whether the move represented a cyclical bounce or a longer-term revaluation of the metal's role in global portfolios.
Key Drivers Behind the Advance
Multiple macro factors aligned to support gold's exceptional performance. Trade-policy uncertainty raised inflation expectations across developed and emerging economies, making non-yielding assets like gold more attractive as inflation hedges. Central banks in emerging markets continued reserve diversification, shifting allocations away from traditional currency reserves toward precious metals as geopolitical tensions created questions about the stability of existing reserve arrangements.
The US dollar index declined throughout much of the year, lowering the opportunity cost of holding non-yielding assets denominated in foreign currencies. This currency dynamic proved particularly significant for NRI investors, as a weaker dollar meant that rupee-based purchasing power increased even before accounting for gold's price appreciation in dollar terms. Simultaneously, real interest rates—the difference between nominal rates and inflation expectations—compressed in many developed economies, reducing the attractiveness of cash holdings and bonds relative to tangible assets.
Geopolitical tensions in multiple regions contributed to safe-haven demand. Supply-side considerations also mattered, with mining production constraints in certain jurisdictions and recycling limitations supporting the fundamental supply-demand balance. Central bank buying accelerated beyond historical norms, with official sector purchases reaching levels that surprised many analysts and created a persistent bid under the market. These factors combined to create an environment where gold attracted capital from multiple investor categories simultaneously—hedge funds seeking inflation protection, central banks pursuing reserve diversification, and retail investors responding to media coverage of the metal's strength.
Implications for NRI Portfolios
NRIs holding gold in USD accounts recorded currency-adjusted gains when converting to rupees, capturing both the metal's appreciation and the dollar's strength relative to the Indian currency. For investors who had maintained dollar-denominated holdings, the combination of these two factors created outsized returns when measured in rupee terms. Those remitting funds for Indian jewellery purchases benefited from stronger dollar purchasing power, allowing them to acquire more physical gold in India for the same dollar outlay compared to prior years.
Domestic premiums widened during wedding months, a seasonal pattern that intensified in 2025 due to the elevated base price of gold globally. Some families responded by shifting timing of purchases earlier in the year or later into the following year to avoid peak wedding season premiums. This flexibility proved valuable for NRIs with advance notice of family events, as the ability to time purchases around premium cycles could yield meaningful savings on large acquisitions.
Comparative observation: gold ETFs listed in the US and Europe delivered similar percentage returns to physical holdings in India once import duties and making charges were excluded, narrowing the historical cost gap for NRIs. This convergence has important implications for portfolio construction, as it suggests that the choice between physical gold in India and ETF holdings in developed markets should rest primarily on convenience, tax treatment, and liquidity preferences rather than return expectations. For NRIs with limited time to manage physical holdings or concerns about storage and insurance, the ETF route became increasingly competitive on a total-return basis.
The strength of gold also affected the relative attractiveness of gold-linked investment products. Gold-linked bonds and structured products that had offered modest returns in prior years became more competitive as underlying gold prices appreciated. NRIs evaluating their overall precious metals exposure found that gold's outperformance relative to other asset classes warranted portfolio review, particularly for those who had underweighted the metal in prior years based on low-return assumptions.
Practical Considerations
Duty-free limits stayed at 50,000 rupees for men and 100,000 rupees for women, unchanged from prior years. At prevailing prices these allowances covered smaller quantities than in prior years, effectively reducing the real value of the duty-free concession. An NRI who could have imported roughly 10 grams of gold duty-free at lower price levels could now import perhaps 6 or 7 grams for the same rupee allowance, a meaningful reduction in purchasing power.
NRIs evaluating physical imports weighed storage, insurance, and making-charge costs against ETF convenience. Physical gold held in India requires secure storage, whether in bank lockers or home safes, and insurance costs rise with the value of holdings. Making charges—the fees paid to jewellers for crafting physical gold into wearable form—typically range from 8 to 15 percent of the gold value, a significant cost that must be recovered through appreciation or justified by the utility of owning physical jewellery.
For those considering ETF routes, expense ratios became more salient as the absolute dollar value of holdings increased. An ETF charging 0.25 percent annually costs meaningfully more on a $50,000 position than on a $10,000 position, making the comparison between different ETF providers more important for larger portfolios. Currency hedging decisions also became more complex, as NRIs had to decide whether to maintain unhedged exposure to gold in foreign currencies or to hedge back to rupees, a choice that depended on views about future currency movements and the cost of hedging instruments.
Tax implications varied by jurisdiction of residence. Some countries treat gold as a collectible with unfavorable long-term capital gains treatment, while others offer more favorable treatment for precious metals held beyond certain holding periods. NRIs needed to understand their specific tax situation before committing to large gold positions, as tax drag could materially affect after-tax returns.
The timing of remittances also mattered more in an environment of elevated gold prices. NRIs planning to send funds to India for gold purchases benefited from monitoring rupee-dollar exchange rates and gold price movements simultaneously, as favorable currency moves could offset some of the impact of higher gold prices, or unfavorable moves could amplify costs. Some investors found it worthwhile to establish systematic remittance schedules rather than attempting to time individual large transfers.
Next steps
Review current gold allocation against overall risk tolerance and investment time horizon. Compare ETF expense ratios and storage options available in your country of residence. Track rupee-dollar movements before scheduling large remittances. Evaluate whether physical gold in India or ETF holdings in your country of residence better matches your liquidity needs and tax situation. Consider consulting with a tax professional familiar with NRI regulations in your jurisdiction before making significant gold purchases or transfers.
Sources
Consult primary data releases from the LBMA and central-bank reserve reports for ongoing price verification.
