Amidst ongoing geopolitical tensions and recent interest rate cuts, gold prices are expected to see a significant rise, with projections estimating a jump of over ₹2,200 per 10 grams by the end of December 2024 and touching an impressive ₹280,000 by March 2025. The yellow metal has already provided strong returns of 21% since the beginning of this year, outperforming the highly volatile equity markets.
Gold has reaffirmed its status as a reliable hedge during times of uncertainty. Since January 1, 2024, when prices were around ₹63,225 per 10 grams, gold has consistently grown in value. By Friday, it was trading at ₹76,300 per 10 grams on the Multi Commodity Exchange (MCX), reflecting its steady performance even as other asset classes struggled to maintain stability.
In comparison, the Sensex has provided a return of 14% on a year-to-date basis, while the Nifty delivered 16%. Even silver has outshined the equity markets, yielding a 24% return during the same period. “The equity markets have remained highly volatile this year, with heavy corrections during the elections and the budget. However, gold has remained relatively steady and has proven to be the best asset class during uncertainties,” remarked Ajay Kedia, Managing Director of Kedia Commodities.
The surge in gold prices comes as India’s gems and jewellery industry, despite having a large domestic market and thriving export sector, struggles to attract substantial Foreign Direct Investment (FDI). In Q1 FY24, FDI inflows into the gems and jewellery sector accounted for just 0.24% of India’s total FDI, though this is an improvement from 0.05% in Q1 FY23. According to the Gem and Jewellery Export Promotion Council (GJEPC), FDI in the sector increased to $40 million in Q1 FY24, compared to $5 million in the same quarter last year.
Vipul Shah, chairman of GJEPC, emphasized the importance of foreign investments, stating, “Foreign investments typically bring not only capital but also advanced technologies, improved production processes, and new market linkages, all of which are vital for the sector’s growth and global competitiveness.”
With gold prices on the rise and the global economic environment remaining uncertain, investors continue to see gold as a safe haven, making it one of the most attractive asset classes for the foreseeable future.
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