Invested in Gold Funds? Know what expert say about your strategy amid PM’s gold appeal

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As markets remained under pressure and global uncertainty increased because of the US-Iran war, many investors started moving towards safe investments like gold and silver. Gold prices also saw a sharp rise during this period as people looked for safer places to park their money. However, Prime Minister Narendra Modi’s recent appeal asking people to avoid buying gold for a year has now created confusion among investors. The appeal was aimed at reducing gold imports so that India’s foreign exchange reserves do not come under pressure during the ongoing crisis. After this appeal and the hike in gold import duty, many people who invested in Gold ETFs and Gold Mutual Funds are now confused about what they should do with their investments. Some investors are worried whether they should continue holding gold funds or sell them now. If you are also among those who have invested money in gold mutual funds or ETFs, here is what market experts say about the situation and what strategy investors should follow now.

PM’s Appeal is mainly for physical gold buyers

According to experts Prime Minister’s message is aimed mainly at reducing India’s heavy physical gold imports. These imports are putting pressure on the country’s dollar reserves and current account deficit. India imports hundreds of tonnes of gold every year in the form of jewellery, bars and coins. However, Gold ETFs and Gold Mutual Funds work differently. When investors buy paper gold products, it does not immediately lead to fresh gold imports. Most fund houses already hold gold within the country, and investors are simply buying units linked to those holdings. This is why experts believe the government’s appeal is not directed at Gold ETF investors.

Why 15% duty hike could benefit existing investors

Expert say that the increase in customs duty on gold may actually work in favour of existing Gold ETF holders. Gold prices in India are based on international gold rates along with import duty and taxes. Once import duty rises, domestic gold prices also move higher. Since Gold ETFs track local gold prices, the value of existing ETF units can also rise. Experts say investors who panic and sell immediately may miss out on the possible gains created by the higher duty structure.

How much gold should you have in your portfolio?

Financial advisors say gold should not be seen as a high-return investment alone. Its biggest role is to act as a safety cushion during inflation, market uncertainty or global tensions. Most experts recommend keeping gold exposure between 5% and 10% of the total investment portfolio. Investors should review their portfolio allocation before taking any decision instead of reacting emotionally to current developments.

What should investors do now?

According to experts, investors whose gold allocation has become too high after the recent rally can book partial profits and shift money into equities or debt instruments. On the other hand, those with very low gold exposure can consider adding Gold ETFs gradually.

Why Gold ETFs remain attractive for long-term investors

Experts believe Gold ETFs continue to remain one of the simplest and safer ways to invest in gold without storing physical jewellery or coins. With fresh Sovereign Gold Bond (SGB) issuances still limited, ETFs have become a preferred option for many retail investors. The biggest advantage is convenience, liquidity and transparency. Investors also avoid concerns related to storage, making charges and purity that usually come with physical gold purchases. Experts say disciplined asset allocation, rather than panic-driven selling, should guide investment decisions in the current market environment.