Is Now the Best Time to Add Gold Loan Stocks to Your Portfolio?

Back in 2015, 24-carat gold prices in India used to be ₹26, 343.50 per 10 grams.

And today, in 2025, gold prices have reached ₹1,22,200 per 10 grams in the Indian market! This means that in just a decade, gold prices have witnessed a whopping 363.85% hike, which technically makes it a great investment option across Indian households.

And not just physical gold (as in jewelry), but gold loan stocks have been trading close to their 52-week highs. Added to that, mortgaging gold/ golden jewelry as collateral to secure loans has also increased by about 118% year-over-year by August 2025.

However, the question is, is 2025 a good time to add some versatility to your portfolio with gold loan stocks in this bullish market? Or will it be better to wait till the bear run? Let’s explore this blog to find out.

Factors that are Pushing International Gold Rates in 2025

There is an array of global, domestic, and geopolitical reasons behind this dramatic surge in gold prices. For instance-

• The recent shutdown of the U.S government has channeled uncertainty in the market. This has led to a data blackout, which in turn makes it tough to assess the health of an economy.
• Not just that, but expectations of interest rate cuts by the Federal Reserve have made yield-bearing assets like bonds and savings accounts less appealing to investors. And as a result, many of them are shifting to gold, which increases its demand along with its price!
• The Russia-Ukraine war, along with political upheavals in Japan and France, has further increased the demand for secure investments.
• Central Banks across the world, which include the People’s Bank of China, have been in the pursuit of purchasing gold. This is just to diversify their reserves from the U.S dollar, and create a hedge fund that nations can use against certain geopolitical risks and inflation. In the end, this creates a high demand, which further drives gold prices upwards.

Gold Loan Stock Performance in 2025

Gold loan businesses have multiplied within just a yearyear’s time! Last year, in the month of August, the total amount of outstanding gold loans in the system was nearly ₹1,40,391 crore. This number has significantly surged to approximately ₹3,05,814 crore in August 2025!This 118% hike in just a year has made investors care very much about investing in gold loan stocks. But what are the reasons that are driving them to invest in gold loan stocks rather than any other investment options?

• A psychological shift

It was the tradition of Indian middle-class households to consider gold as savings. But, with the rise of inflation rates and challenging position of employment opportunities, this gold is now used by the people as a source of ready cash. More often than not, middle-class families use their gold as collateral to secure loans from NBFCs and banks. This specific trend, driven by the need for funds for weddings or business, has created some great business opportunities as banks and NBFCs are experiencing greater footfall.

• Actual valuation

Federal Bank, which is considered a mid-sized traditional bank, offers gold loans. Its P/E (Price to Earnings ratio) ratio accounts for 12 times its estimated standalone earnings for the financial year 2026. However, the NBFC Manappuram Finance happens to trade gold at a P/E ratio of about 15 times its expected standalone earnings for the same period. This means rather than 12, investors are willing to pay ₹15 for every ₹1 of expected earnings.

Apart from that, Muthoot Finance, one of the largest players in the gold loan NBFC segment, trades at a P/E ratio of about 17 times its estimated standalone earnings for 2026!

What this actually signifies is that the gold loan market in India is booming. And although there are chances for some short-term volatility, investors are more than willing to overlook them for the high long-term reward.

Note: If you’re more of an intraday trader, consider using the Nwealth platform to churn out profits daily, with proper risk management strategies.

Reasons for the Short-Term Volatility

As of now, analysts state that there might be slight dips in gold prices. Why so?

The Relative Strength Index (RSI) is a crucial tool that investors and traders use to determine whether a stock, or any other asset, is being overbought or oversold. And according to RSI, the gold market has seen the ‘overbought’ phase, which means there might be some very minor setbacks, which could pull gold prices down.

However, the impact of gold price volatility won’t be much of a problem for the investors. That’s because economic instability, various geopolitical risks, and high demand for gold across Central Banks will surely keep gold prices elevated throughout 2025.

So, Should You Invest in Gold?

If you are planning to put your money into gold as an investor, well, it’s a great decision anyway! Although you may indeed see the prices wobble a little, the long-term scenario is looking very strong!

Also, if you want to put your money on dividend stocks, here are some of the best options in 2025 that you can consider!And don’t think of jewelry alone. You can even put some of your eggs into the best gold stocks in India, like TITAN, MUTHOOTFIN, THANGAMYL, SKYGOLD, GOLDIAM, and diversify your portfolio effectively.

F.A.Qs

Why are gold prices soaring?

There are various reasons behind the surge in gold prices in the current market, like-

• Economic uncertainty.
• Geopolitical risks.
• Persistent fears of inflation.
• Massive demand for gold from global Central Banks.

What will gold be worth in 5 years?

The short-term volatility makes it a little difficult to predict the exact valuation of gold 5 years from now. However, it is expected that gold prices could touch ₹1.7 lakh per 10 grams 5 years down the line.

What happens to gold when the stock market crashes?

This might surprise you, but gold is much less affected at the time of recessions or stock market crashes! Besides that, the material also serves as a reserve during tumultuous times.

What is the safest thing to invest in right now?

Gold, in a physical form or in a digital form, is one of the safest investments if you are thinking of investments.

What is the best way to invest in gold?

The best way to invest in gold is to either buy jewelry or invest in Sovereign Gold Bonds, Gold ETFs, etc.

Amilia Brown

Amilia Brown is a seasoned business writer & strategist who simplifies complex business concepts and turn them into engaging narratives. As a trusted business writer, she delivers actionable insights with precision.