Gold has long been seen as a timeless asset in investment portfolios, prized for its economic, emotional, and ornamental value. Looking ahead, SmartWealth.ai projects that gold prices in FY26 could experience significant volatility, ranging between a 7% decline and a 20% gain. This projection comes as part of a comprehensive analysis of market conditions and historical trends that have shaped gold’s performance over the past decade.

Historical Performance of Gold

Over the past 10 years (2016-2025), gold has delivered a 12.3% compound annual growth rate (CAGR), making it a highly competitive asset in the market. Interestingly, this growth has almost caught up with the Nifty50 index, which posted an 11.4% CAGR over the same period. Additionally, Akshaya Tritiya has seen a remarkable rise of 166.79% in gold prices since 2015, highlighting its long-term value as a wealth-preserving asset.

FY26 Outlook and Volatility

Looking ahead, the outlook for gold prices in FY26 is highly volatile. According to SmartWealth.ai’s Diversified Momentum Investing (DMI) framework, gold prices are expected to rise by 3%-7% by Akshaya Tritiya 2026 under base-case scenarios. However, broader market stresses and geopolitical developments could lead to fluctuations ranging from a 7% decline to a 20% gain in gold prices.

In contrast, equities such as the Nifty50 are expected to show a mild downward bias, with potential movements ranging between a 7% decline and a 3% gain in the near term. As the market faces heightened geopolitical uncertainty and economic challenges, diversification and dynamic risk management will become crucial for investors.

Gold as a Hedge and Diversifier

Gold has historically acted as a natural hedge during major equity market downturns, offering stability when equities falter. During times of crisis — such as recessions, wars, or periods of financial instability — gold prices tend to rise, making it a "safe haven" asset. This makes gold a critical part of a diversified portfolio, especially when the purchasing power of fiat currencies erodes due to inflation or when local currencies weaken.

Pankaj Singh, the Founder & Principal Researcher of SmartWealth.ai, emphasizes the importance of including gold in portfolios, not necessarily in a traditional buy-and-hold manner, but as a dynamic diversifier and hedge against market volatility.

Conclusion

The volatility expected in gold prices in FY26 makes it essential for investors to adopt a flexible approach, leveraging gold as a risk management tool while balancing equities in their portfolios. Given its low correlation with equities, gold offers a unique opportunity for investors to preserve wealth during times of market stress.

Gold’s long-term potential remains strong, and for investors seeking stability amidst uncertainty, it continues to shine as a valuable asset class.