Gold is considered the world’s most valuable metal, making it a store of value. The yellow metal enjoys immense popularity as an investment in India because of its qualities. It is highly liquid and capable of protecting against inflation. You can invest in gold by purchasing jewellery, coins, bars, gold ETFs, gold funds, or by participating in the SGB scheme. Once you decide to put your money into gold, you must choose how to invest it methodically.
Long-term investors may find Sovereign Gold Bonds (SGBs) ideal, as they offer stable returns along with annual interest. However, you must know that gold does not provide consistent returns like stocks or bonds. Yet, it has shown over the years to be reliable for protecting the value of investments. This blog post will fill you in on everything you need to know about the potential return on gold over the last 5 years.
Overview of gold investment performance in the last 5 years
Gold rates in India have significantly changed since the pandemic began in 2020. This year witnessed steep swings that unsettled the equity market. Gold rates started falling towards the close of the year 2020. Over the last two years, gold prices have seen slow growth and fluctuated on a regular basis.
The value of gold increased significantly in the last five years. In terms of per 10 gm price, the price of gold went up from Rs. 48,651 in 2020 to Rs. 77,913 in 2024, a whopping increase of 60.14%. A number of factors contributed to the increase in the price of gold in India. Over the last 10 years, estimates of the world’s gold mine reserves have varied slightly yearly, reaching 59,000 metric tons in 2023.
Increase in the price of gold in the last five years
| Year | Price (24 karat per 10 grams) |
| 2020 | Rs.48,651.00 |
| 2021 | Rs.48,720.00 |
| 2022 | Rs.52,670.00 |
| 2023 | Rs.65,330.00 |
| 2024 | Rs.77,913.00 |
Data source: Bankbazaar.comÂ
Comparing gold returns to other investment vehicles
There are several asset classes to pick from when investing, including stocks, bonds, commodities, and real estate. Gold is one asset class that has endured. Although investing in gold has disadvantages, it also has special benefits that make it a desirable choice for investors.
- Gold is often regarded as a safe-haven investment. Investors turn to gold as a store of value during times of market uncertainty. This is because gold has a long history of holding its value and acting as an inflation hedge. In contrast to fiat currency, which is susceptible to inflation and devaluation, gold has held its purchasing power for centuries.
- The correlation between gold and other asset classes is minimal. Gold typically moves in the opposite direction from stocks, bonds, and real estate, which can all go through ups and downs at the same time. Accordingly, adding gold to your investment portfolio can help reduce volatility and diversify your risk. You can create a more stable and balanced portfolio by distributing your investments among several asset classes.
- Gold is a great way to protect yourself from currency fluctuations. Historically, gold and the US dollar have had an inverse relationship. Gold price tends to rise when the dollar weakens, as gold is primarily priced in US dollars. Investors who are worried about their currency’s depreciation or who want to safeguard their purchasing power in foreign markets may find this to be especially advantageous.
- Gold liquidity is high, and investors may trade it seamlessly across international markets. Gold can be purchased and sold by investors anywhere in the world. People can trade gold anytime since the market is open around the clock and has provided a great return on gold in the last 5 years.
Key factors influencing gold prices recently
Several factors, local and global, influence gold prices. We will explain how the price of gold is determined.
• Impact of Global Economic Changes on Gold Prices
Historically, global events have impacted the price of gold. Geopolitical events such as wars and pandemics can push up the price of gold. Economically, central bank reserves and their purchasing trends influence gold prices. In times of economic recession, which rattle financial markets, investors turn to gold as a safe haven asset. These trends have influenced the return on gold in the last five years.
• Government Policies in India Impacting Gold Prices
Government policies greatly impact gold prices in India by influencing demand and supply, affecting market dynamics. Import duties, taxation, and gold monetization schemes all have a bearing on domestic gold prices. If the government increases the import duty on gold, gold prices tend to rise.
Strategic approaches to investing in gold
Gold is considered a safe investment option. It is designed to prevent the reduction of your money’s worth during inflation or crisis. You need to plan out your strategies carefully when investing in gold to get maximum gain. People who have invested in gold in the past have seen a significant return on gold in the last 5 years.
• Timing the Market: When to Buy and Sell Gold
Gold is often seen as a safe haven, which explains the rise in gold price during economic downturns, wars, and times of rising inflation. Find opportunities to invest in gold when the stock market is low and share prices are trending down. Wait to make your sale when prices surge.
Following global news trends, changes in interest rates, and the value of the US dollar can help you choose the best time to trade gold. In 2024, gold prices reached a record high due to geopolitical tensions and rising consumer prices.
• Long-Term vs. Short-Term Gold Investment Strategies
Those who invest in gold tend to hold on to it. Gold increases in value over the years, which is why it works well. In uncertain times, owning gold would give you confidence. Gold can bring traders more money as investors buy it and sell it back when the price rises or falls.
There are strategies for each situation, and what suits one person might not be right for another. According to research, gold has seen around 60% return in the last 4 years. Select a gold strategy that addresses what you are looking for and how much risk you can handle.
Conclusion
You should consider some essential factors if you plan to buy gold in India. Take into account how gold investment offered a great return on gold in the last 5 years, and how well you could benefit from that if you invest now. Choose to buy hallmarked gold or solid gold-based investment products such as ETFs.
FAQs
Q. What is the safest way to invest in gold?
Investment experts advise investing in gold exchange-traded funds to gain exposure to gold in one’s portfolio. Buying physical gold requires you to invest in storage facilities, which can be expensive. Â
Q. How do taxes affect gold investment returns in India?
You are required to pay a tax of 20% and a cess of 4% on long-term capital gains made from gold investments. Consequently, the applicable tax rate for gold investments is 20.8%. You are not required to pay tax at this rate for short-term capital gains.
