In the wake of escalating geopolitical tensions, gold prices have surged both domestically and globally. On Thursday, April 11, the price of 10 grams of pure gold (24-carat) hovered around ₹72,120 in the domestic market.Internationally, spot gold climbed to $2,345.56 per ounce, marking a 0.6% increase, with US gold futures also rising by 0.6% to $2,362.80.The rally in gold prices has been attributed to several factors, foremost among them being higher-than-expected consumer prices persisting for the third consecutive month, thus challenging the Federal Reserve’s tolerance for inflation. Data revealed that US inflation in March exceeded forecasts, effectively diminishing the likelihood of a rate cut in June, according to news agency Reuters.This unexpected inflation surge has led market strategists to anticipate a longer period of tight monetary policy, consequently supporting the appeal of gold as a hedge against inflation and geopolitical uncertainties.Central bank purchases, safe-haven inflows amidst ongoing geopolitical risks, and momentum-following fund demand have collectively fueled gold’s 14% gain so far this year.Moreover, recent strong US economic indicators, including a robust jobs report that surpassed expectations, have raised doubts about the feasibility of rate cuts in the near future. Higher interest rates typically reduce the attractiveness of holding non-yielding assets like gold, but the prevailing geopolitical tensions have counteracted this effect, further propelling gold prices upwards, a Reuters report said.What lies ahead?Looking ahead, experts foresee a continuation of the upward momentum in gold prices.Nirav Bhansali, a member of the Gem & Jewellery Export Promotion Council (GJEPC), predicts that gold prices may surge to ₹75,000 per 10 grams by the end of the year.Economic factors such as inflation and interest rates are expected to significantly influence future gold prices.What should investors do?Waiting for a price drop may not be advisable, as there is no guarantee of a decrease, and prices may continue to rise beyond reach.Given gold’s immediate protection against inflation and its role in diversifying investment portfolios, investors should assess their portfolios and consider allocating a portion, typically 10% or less, to gold.This strategy can help hedge against market uncertainties and maintain portfolio diversification amidst volatile geopolitical and economic conditions.