Gold has surpassed Indian equities for the fourth consecutive Diwali-to-Diwali cycle, maintaining a trend where the yellow metal has outperformed stocks in seven of the last eight years. The price of 24-carat gold (1 gram) stood at Rs 11,431 at 10:05 am, according to data from the India Bullion and Jewellers Association (IBJA). MCX gold has appreciated by approximately 40 percent since last Diwali, while the Nifty 50 index rose by around 5 percent during the same period. In the 2024 Diwali-to-Diwali cycle, gold returned 32 percent, compared to a 24 percent increase in the Nifty. In 2023, gold experienced a 21 percent rise, whereas the benchmark index advanced by only 10 percent.
On September 17, spot prices reached an unprecedented $3,683 per troy ounce—an all-time high and a 43 percent increase this year—before retracting due to a stronger-than-expected stance from the Federal Reserve. Analysts pointed to several factors fueling the bullion rally, including anticipated easing of US Federal Reserve policy and heightened demand for safe-haven assets amid geopolitical tensions and tariff-related uncertainties. Furthermore, central banks, particularly in Asia, have been accumulating gold to reduce dependence on the dollar, according to various media reports. Experts believe that gold may continue to outperform for another year, after which equity markets might begin to catch up.
Silver also exceeded Indian equities for the third consecutive year, driven by robust industrial demand from solar panel production, semiconductors, and electric vehicles. The price of silver (1 kilogram) was reported at Rs 1,34,050 at market close yesterday, as per IBJA data. US brokerage firm Goldman Sachs has forecasted that gold could reach $5,000 an ounce if investors shift even a small portion of their Treasury holdings into the metal. With US labor data indicating signs of softening, the Fed’s recent dovish remarks have lowered the opportunity cost of holding gold, attracting risk-averse investors to bullion.
However, analysts have warned that the rally could be overextended, reminding investors that gold peaked in 2011 before entering a prolonged decline as speculative inflows receded.