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Historical Gold Price Trends In India

Historical Gold Price Trends In India_Kuvera

What has the gold price trends been over the last 3, 5 and 10 years?

 

Gold has long been considered a safe-haven asset, especially during periods of market volatility and inflation. The performance of gold prices in India has reflected global economic conditions, including geopolitical tensions, currency fluctuations and changing interest rates. India is one of the largest consumers of gold globally with a long-standing cultural affinity for the precious metal. For many Indians, gold is not only seen as a symbol of wealth but also as a secure and stable investment.

 

 

While the price of gold has experienced fluctuations over the years, its appeal as a reliable investment option has remained strong. In the past decade, the price of gold has predominantly trended upwards with periods of growth driven by global economic conditions, inflation concerns and market uncertainty.

 

3-Year Performance (2021-2024)


Over the last three years, gold prices in India have seen notable volatility. The price of gold spiked in 2020 as the pandemic caused uncertainty in global markets, reaching an all-time high of over ₹56,000 per 10 grams in August 2020. Since then, gold prices have fluctuated, and as of late 2024, gold is trading around ₹56,000-₹59,000 per 10 grams, maintaining a steady but slightly downward trend in recent months due to market recovery and a stronger dollar.

 

 

5-Year Performance (2019-2024)


Over the last five years, gold prices in India have seen an overall upward trend, driven by factors such as global economic uncertainty, low-interest rates and inflation concerns. Prices saw a significant rise starting in 2019, peaking during the pandemic in 2020. Since 2021, the prices have been stable but have faced downward pressure due to recovery in equity markets and global interest rate hikes.

 

 

10-Year Performance (2014-2024)


Over the last decade, gold prices in India have risen substantially. In 2014, the price of gold was around ₹26,000 per 10 grams. The last 10 years have seen significant growth, especially with the price crossing ₹50,000 per 10 grams during global market uncertainties. The overall price movement shows a strong upward trajectory, although it has been punctuated by short-term corrections.

 

 

The below chart shows the trend of gold prices since 2000

 

 

Gold Index Performance in India

 

The Nifty Gold BeES and SBI Gold Fund are two examples of gold-focused indices in India. These funds track the price movement of gold in the domestic market and reflect the changes in gold prices.

 

 

Return Range: 10% to 12% annually during the 2020-2021 surge, with a more moderate return in subsequent years.

 

 

 

Why Investing in Passive Funds Can Be a Better Medium than Physical Gold?

 

While physical gold has long been a popular investment vehicle in India due to its historical value and cultural significance, passive funds that track gold prices or gold-related indices offer several advantages.

 

1. No Storage or Security Concerns

 

Physical gold requires safe storage, either in a locker or at home, and poses the risk of theft or damage.

Passive gold funds, such as gold ETFs and gold index funds are stored digitally, eliminating concerns about physical storage and security.

 

2. Liquidity and Flexibility

 

Physical gold can be cumbersome to sell, often requiring you to visit a jeweller or dealer. The prices can also vary and the sale process may take time.

Passive funds like gold ETFs are listed on the stock exchange, offering high liquidity. You can buy and sell them anytime during market hours, providing much more flexibility in managing your investment.

 

3. Cost-Effectiveness

 

Physical gold comes with additional costs such as making charges, taxes and storage fees. These costs can erode returns over time.

Passive gold funds generally have lower costs and expense ratios. These funds replicate the performance of gold, so there are fewer associated costs.

 

4. Diversification and Portfolio Management

 

Passive funds allow you to invest in gold without having to hold physical gold. This enables you to diversify your portfolio with minimal effort and risk as they are typically part of larger, diversified financial portfolios (stocks, bonds etc.).

Physical gold can be part of a limited portfolio without providing much diversification.

 

5. Tax Efficiency

 

Passive gold funds offer better tax treatment compared to physical gold. Gold ETFs are taxed under the long-term capital gains (LTCG) tax rate if held for more than 3 years which is 20% with indexation benefits.

Physical gold may attract higher taxes when sold and there are no indexation benefits unless held for a long time.

 

6. Regulated and Transparent Investment

 

Passive funds are highly regulated by the Securities and Exchange Board of India (SEBI), offering a transparent and secure investment option.

Physical gold, although a reliable asset does not come with the same level of regulatory oversight and buying can sometimes involve high dealer margins.

 

 

Wrapping Up

 

In conclusion, while physical gold has long been a popular investment choice in India, it comes with challenges such as storage, security concerns and high transaction costs. On the other hand, passive funds such as gold ETFs and gold index funds, offer a more efficient and cost-effective alternative for gaining exposure to gold’s price movements. These funds provide liquidity, ease of trading and lower management costs compared to owning physical gold, all while tracking the performance of the gold market. For investors looking to diversify their portfolios with gold, passive funds present a modern, hassle-free way to participate in gold’s long-term potential without the complexities associated with physical ownership. 

 

Interested in how we think about the markets?

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DISCLAIMER: Mutual Fund investments are subject to market risks. Read all scheme related documents carefully. Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. Investments in securities market are subject to market risks. Read all the related documents carefully before investing. The securities quoted are for illustration only and are not recommendatory.

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