Buying gold in India is not just auspicious and traditional but also holds an essence of safety with long-term store of value. Often during festivals, the demand for gold has been high and one of the most favorite occasions to invest in this precious metal is Dhanteras. Over the past five years, there has been a paradigm shift in gold's performance from Dhanteras to Dhanteras, with the price of the yellow metal, which was once down 5% in the first year of Covid, giving a remarkable 60% return this year.
Dhanteras To Dhanteras! Gold Performance Over 5 Years:
First and foremost, gold in India is not purchased to hedge short-term returns in uncertainties; it's bought to store for future long-term wealth creation. Even then, gold is passed on from generation to generation! Irrespective of the prices of gold, the sentiment among Indians for this metal does not waver!
Indian households collectively hold the world's largest private gold reserves, to the tune of a whopping $3 trillion. Not just consumers, but even businesses prefer gold because of its high liquidity.
Over the past five years, gold prices in India have seen exceptional performance owing to robust central bank gold buying, heightened geopolitical tensions, economic uncertainty, intense tariffs war and rate cut expectations.
Data from Axis Securities revealed gold in India has given a 60% return from last year Dhanteras to the current one. This is double the gains of 30% in 2023-24 Dhanteras. Prior to that, gold returns were barely 10% and 20% during Dhanteras celebrated between 2021-22 and 2022-23. In the past five years, the lowest gold performance was in 2020-21 due to the Covid-19 pandemic.
A day before Dhanteras, MCX gold and silver touched new all-time high of Rs 132,294 per 10 grams and Rs 170,415 per 1 kg. Gold is expected to hit Rs 1.5 lakh by next Diwali.
Gold Price To Hit Rs 150,000 Soon?
According to analysts at Axis Securities, five key factors will drive the sentiment in gold prices till next Diwali. These are:
1. A hyperinflation scenario due to excessive money printing by the Central bank, particularly the US, to service its debt, may devalue the currency, which may lead investors to park their funds in Bullion, particularly Gold.
2. The de-dollarisation trend initiated by several central banks globally has supported the rise in gold prices. If this trend accelerates next year, gold is likely to continue reaching new highs.
3. The Rising ETF demand is pushing prices to a record high. If ETF inflows remain strong, gold prices are likely to continue their upward trajectory into next year.
4. Central banks have been accumulating gold at every price dip. Last year, they added over 1,180 tonnes to their reserves. Although the pace of buying has slowed this year due to gold trading at record highs, central banks are still on track to reach around 1,000 tonnes by year-end. If this buying trend continues into next year, gold prices could see a significant rally.
5. President Trump's irrational tariff policies have already spooked the global market, which has benefited precious metals. Global uncertainty, combined with expectations of rate cuts, will benefit Gold prices next year.
"Traders may consider accumulating Gold on dips in the range of Rs 1,15,000 to Rs 1,05,000, with a potential upside target of Rs 1,45,000-1,50,000 by next Diwali," said analysts at Axis Securities in their note.
How To Strategies Your Investment In Gold Till Next Diwali?
"In the current market where gold and silver prices are trading at record high levels, investors should take a balanced and well-considered approach," said Jashan Arora, Director, Master Trust Group to GoodReturns.
Thereby, the expert advises investors to avoid aggressive buying at these elevated levels. Instead, he suggests those who have limited or no exposure may consider "gradual accumulation through systematic investments" such as gold ETFs, gold mutual funds, or e-gold platforms. Why? Because, they offer low-cost, liquid, and transparent access to the metal without the challenges of physical storage.
Meanwhile, to existing investors, the expert suggests they should look to "hold their positions" to benefit from the prevailing momentum, while new investors can "wait for minor price corrections" or "invest in phases" to manage entry levels effectively.
Ideally, the expert believes, "precious metals should account for about 10-15% of an investor's portfolio", striking the right balance between risk protection and long-term value appreciation.
Gold and silver continue to play a vital role as safe-haven assets, offering stability during uncertain economic conditions and serving as a reliable hedge against inflation.
Disclaimer: The views and recommendations expressed are solely those of the individual analysts or entities and do not reflect the views of Goodreturns.in or Greynium Information Technologies Private Limited (together referred as "we"). We do not guarantee, endorse or take responsibility for the accuracy, completeness or reliability of any content, nor do we provide any investment advice or solicit the purchase or sale of securities. All information is provided for informational and educational purposes only and should be independently verified from licensed financial advisors before making any investment decisions.
Click it and Unblock the Notifications
Sign in with Google