Why This Is Not the Time to Buy Gold This Diwali

As Diwali approaches, many investors are tempted to buy gold, fueled by its recent meteoric rise in 2025. While gold has traditionally been seen as a safe haven and a reliable asset during uncertain times, recent market dynamics suggest caution. Here’s why now might not be the best time to invest in gold and what smarter alternatives you should consider.

The Parabolic Rise and Its Impending Correction

Since 2020, gold prices have skyrocketed, following a parabolic pattern—an explosive rally driven largely by speculation and geopolitical tensions. Such rapid rises are often unsustainable, signaling an eventual correction. Historically, assets that experience a sharp, parabolic surge tend to consolidate or fall back, sometimes sharply. Experts warn that gold might be entering such a correction phase, making it risky to buy at this peak.

Limited New Buyers – The Flipping Concept

Gold is a mature asset with a huge existing investor base. Most of the market holders entered during earlier rallies, leaving little room for fresh investors. Unlike emerging assets like Bitcoin, which still have significant growth potential with a smaller established community, gold’s market is largely saturated. This “flipping” phenomenon indicates that fewer new buyers will continue to push prices higher, and profit-taking could accelerate any decline.

Reduced Central Bank Purchases

Between 2020 and 2024, central banks globally, including big importers like China, India, and Russia, heavily bought gold to hedge geopolitical and economic uncertainties. These purchases propelled prices upward. However, in 2025, the pace has slowed significantly. With central banks reducing their gold buying, the main demand driver is waning, increasing the likelihood of a correction.

Asset Class Rotation and Market Valuations

Currently, the Indian equity markets—such as the Nifty 50—are relatively undervalued compared to gold. The gold-to-equity valuation ratio suggests gold is expensive relative to stocks. Historically, when such disparities exist, capital tends to rotate from overvalued assets to undervalued ones. This means that instead of buying gold now, it might be smarter to look at undervalued equities or other asset classes that have more room to grow.

Government’s Role and Future Regulations

Gold often gains during times of fiat currency weakness or geopolitical unrest, but governments worldwide are aware of this dynamic. They might introduce new taxes or regulations to curb excessive gold accumulation. If gold corrections begin, governments could implement measures to make gold less attractive or more taxable, further influencing prices.

The Bottom Line: Exercise Caution

While gold has been a lucrative asset for the past few years, recent technical and macroeconomic signals point toward a correction. Buying gold right now might mean catching a falling knife, especially when other assets like equities seem more attractive and undervalued.

🌍 What I’m Exploring Instead

I’m looking outward — toward global equities, especially the US markets. Diversification isn’t just smart; it’s necessary. Platforms like Vested make it easier than ever to access international opportunities, and I’m using this time to rebalance my portfolio with long-term growth in mind.

🪔 A Wandering Mind’s Diwali Mantra

This Dhanteras, I’m lighting diyas not just in my home, but in my financial thinking. I’m choosing patience over impulse, strategy over sentiment.

Gold will always shine. But wisdom? That’s the real wealth.