The rise of gold as a strategic pillar for the modern investor portfolio

For centuries, gold has been a symbol of wealth, a medium of exchange and a safe haven to hold on to during times of crisis. From its first discovery in ancient Egypt around 4000 BCE to the establishment of the Gold Standard in the UK in 1717, the journey of this precious metal in the financial system is fascinating. Today, the modern Indian investor is spoilt for choices when it comes to investments. But, the allure of this yellow metal remains steadfast. The decision to buy gold for a modern Indian household is no longer only about tradition. It now forms a core part of any resilient and diversified investment portfolio that is capable of weathering global macroeconomic shifts.

The multi-faceted appeal of gold

It would be safe to say that gold serves a dual purpose in an investment portfolio, offering advantages during both economic expansion and periods of uncertainty. During times of economic growth, the yellow metal’s performance is supported by pro-cyclical consumer demand, particularly in sectors like jewellery and technology. Conversely, during periods of economic instability, counter-cyclical investment demand drives prices higher as investors seek a safe haven for their money.

This safe haven status is particularly relevant today. As geopolitical tensions rise and global markets face headwinds, gold provides a layer of security that few other assets can match. Historically, gold has acted as a hedge against geopolitical risks and inflation, protecting the purchasing power of investors against the devaluation of fiat currencies. Unlike paper money, which can be printed in unlimited quantities to support monetary policy, the supply of gold is finite.

A proven portfolio diversifier

One of the most compelling reasons to include gold in a portfolio is its low correlation with other major asset classes. Data from January 2015 to December 2025 indicates that gold has a correlation of approximately -0.17 with equities (represented by the NIFTY 50 TRI) and a low correlation of 0.09 with debt. This means that when equity markets are volatile or trending downward, gold often moves independently, or even in the opposite direction, helping to reduce overall portfolio risk.

The historical performance of gold during major global events underscores this strength. For instance, gold delivered absolute returns of over 28 per cent during the calendar year 2020, amidst the first Covid-19 lockdowns. It has also shown resilience during other significant periods, such as the 2016 demonetisation in India, the implementation of GST and various geopolitical conflicts like the Russia-Ukraine war.

Limited supply and growing demand

The fundamental value of gold is also supported by its scarcity. All-ground gold stock is estimated at approximately 2,19,891 tonnes, with a significant portion held in the form of jewellery (44 per cent) and by central banks (18 per cent). Central banks, in particular, continue to uphold gold’s role as an essential part of monetary reserves.

Furthermore, gold mine production has remained relatively stagnant in recent years. New discoveries are becoming rare and the timeline from discovery to actual production can span decades. This limited supply, coupled with diverse demand from investors, technology sectors and central banks, underpins gold’s long-term value.

The rise of gold ETFs and Fund of Funds

While physical gold commonly seen in the form of jewellery, bars or coins remains to be popular in India, it comes with inherent challenges such as concerns around purity and storage, security risks and potential issues regarding hallmarking. In such a scenario, gold Exchange Traded Funds (ETFs) and Gold Fund of Funds (FOF) have emerged as an efficient alternative for gaining exposure to this asset class.

Simply put, gold ETFs are open-ended mutual fund schemes that track the domestic price of gold. They offer several advantages, including:

• Convenience: Investors can buy and sell gold units on the stock exchange just like company shares.
• Purity: The units are backed by physical gold of high purity, eliminating concerns about quality.
• Liquidity: Being traded on exchanges, they offer high liquidity, allowing investors to enter or exit positions easily.
• Cost-effective: They eliminate the need for making charges or lockers, making them a more cost-effective way to hold gold for investment purposes.
• Accesibility: For those who don’t have a Demat account, a gold Fund of Funds offers a simple route to invest into gold by investing in the units of an underlying gold ETF.

Investment in gold-related products continues to rise globally, particularly following major international tariff events and wars. In India, the trend is no different, as more investors recognise the ease of the mutual fund route for gold investment.

HSBC Gold ETF: A simple path to diversification

For investors looking to integrate gold into their investment portfolios, the HSBC Gold ETF comes as a compelling option. The New Fund Offer (NFO) is scheduled to run from March 16 to March 18, 2026. As an open-ended scheme tracking domestic prices of Gold, it provides a transparent and efficient way to participate in the potential of the yellow metal.

Some key features of the HSBC Gold ETF are:

• Seek returns that, before expenses, track the performance of domestic prices of Gold subject to tracking error. he Scheme do not guarantee/indicate any returns.
• Offering a simple route for both seasoned and first-time investors to diversify through a mutual fund platform.
• As per the scheme’s nature, the risk is categorised as high, aligning with the price volatility of the underlying commodity.

As an investor, you can apply for the NFO through authorised distributors, online investment platforms, or directly through the HSBC Mutual Fund website during the subscription period. By choosing a regulated and digital path like the HSBC Gold ETF, investors can focus on the strategic benefits of gold without the logistical burdens of physical ownership.

HSBC Gold ETF Fund of Fund: Gold investment made easy

To further simplify access, the HSBC Gold ETF Fund of Fund offers a way for investors to gain exposure to gold without the requirement of a Demat account. This is an an open-ended fund of fund scheme investing in the units of HSBC Gold ETF, making it a convenient choice for regular mutual fund investors.

Key highlights of the HSBC Gold ETF Fund of Fund include:

• NFO Period: The subscription window is open from March 19 to March 25, 2026.

• Ease of Access: It allows investors to participate in the gold market through the familiar mutual fund route, utilising Systematic Investment Plans (SIPs) or lump sum investments.

• Investment Objective: The investment objective of the Scheme is to seek to provide returns that are in line with returns provided by HSBC Gold ETF. There is no assurance that the investment objective of the Scheme will be achieved.

• Reach: This product is ideal for those who prefer not to manage a demat or trading account but still wish to benefit from gold as a portfolio diversifier.

In conclusion, as we navigate global tariff events, shifting interest rate decisions and ongoing geopolitical uncertainty, the role of gold as a stabiliser cannot be overlooked. Whether as a hedge against inflation or a tool for diversification, gold remains to be a universal asset for the Indian investor. It is globally recognised and accepted and made more accessible than ever before through the ETF and FOF routes.

Source: WGC, Bloomberg, HSBC MF Research. Data s of Feb 28, 2026 or latest available.

Note - Please refer Scheme Information Document (SID) of HSBC Gold ETF and HSBC Gold ETF Fund of Fund for more details on Asset Allocation of the scheme

Product label

HSBC Gold ETF

(An open-ended scheme tracking domestic prices of Gold)

HSBC Gold ETF Fund of Fund
(An open-ended fund of fund scheme investing in the units of HSBC Gold ETF)

Note to the Reader: This article has been produced on behalf of the brand by HT Brand Studio and does not have journalistic/editorial involvement of Mint.