Gold outperforms equities for the 4th consecutive Diwali cycle
New Delhi: Gold has outperformed Indian equities for the fourth consecutive Diwali-to-Diwali cycle, continuing a trend where the yellow metal has outperformed equities in seven of the last eight years.
The price of 24-carat gold (1 gram) was at Rs 11,431 at 10.05 am, according to data published by the India Bullion and Jewellers Association (IBJA).
MCX gold has gained approximately 40 per cent since last Diwali, while the Nifty 50 rose around 5 per cent in the same timeframe. In 2024, Diwali-to-Diwali returns of gold was 32 per cent, compared to a 24 per cent rise in the Nifty. In 2023, gold rose by 21 per cent, while the benchmark index only advanced by 10 per cent.
On September 17, the spot prices touched an eye-watering $3,683 per troy ounce—an all-time high and up 43 per cent this year—before pulling back due to a stronger-than-anticipated Federal Reserve stance.
Analysts identified several factors driving the bullion rally, including expectations of US Federal Reserve policy easing and increased demand for safe-haven assets due to geopolitical tensions and tariff-related uncertainty. Further, central banks, particularly in Asia, are stocking up, reducing reliance on the dollar, according to multiple media reports.
They believe that the metal may continue to outperform for another year, after which equities may begin to close the gap.
Silver also outperformed Indian equities for the third consecutive year, driven by industrial demand from solar panel manufacturing, semiconductors, and electric vehicles.
The price of silver (1 kilogram) was at Rs 1,34,050 at market close yesterday, according to data published by the India Bullion and Jewellers Association (IBJA).
US broking firm Goldman Sachs predicted that the gold may reach $5,000 an ounce if investors transfer even a fraction of Treasury holdings into the metal.
With US labour data showing signs of softening, the Fed’s recent dovish comments have reduced the opportunity cost of holding gold, luring risk-averse investors into bullion.
Analysts, however, cautioned that the rally may be overextended and reminded investors that gold peaked in 2011 before entering a prolonged decline as speculative inflows reversed.