Ahead of Dhanteras 2024, how has gold glittered so far this year?

Just as India gears up to celebrate Dhanteras tomorrow, in some good news for Indians, gold prices today witnessed a dip of about Rs 10, with 24-carat gold currently valued at Rs 8,045.3/gram and 22-carat gold at Rs 7,376.3/gram.

As per the All India Sarafa Association, gold prices fell by Rs 400 to Rs 81,100/10 grams in Delhi today. However, silver remained flat at Rs 99,500 per kg. Meanwhile, gold of 99.55 purity declined Rs 400 to Rs 80,700 per 10 grams on Monday.

The value of gold as a symbol of wealth and prosperity in our culture is no secret, which is why Indians look forward to buying it on auspicious, festive occasions like Dhanteras. Moreover, with the wedding season setting in, the demand for gold is only set to increase in the months to come.

At 24%, the yellow metal's annual return in 2024 has been nothing less than glittering. Compare this with the 14.88% returns gold delivered in 2023. The last time gold returns skyrocketed was at the peak of the pandemic, i.e., in 2019-2020, when gold's annual yields were at 24.45% and 28.24%, respectively.

In 2024, gold's demand as a safe investment avenue has only skyrocketed. Geopolitical tensions and inflationary pressures have pushed not just individual investors but even central banks to make a beeline for the yellow metal. During the second half of this year, India's RBI and Poland's National Bank were among the largest buyers of gold.

Per a report by Religare Broking, global official reserves of gold burgeoned by 290 metric tons during the first quarter of 2024. The momentum continued well into the second quarter as well, with global central bank gold purchases jumping by 6% to 183 tons during this period.

"We continue to believe that gold has further upside potential wherein any dips could present buying opportunities. According to our recent quarterly report, a correction of 5-7% is plausible and could serve as an accumulation zone," note experts at Motilal Oswal Financial Services.

Returns-wise, how has gold performed?

Data from CapitalMind PMS suggests that between 2000 and 2024, gold has outperformed Nifty and silver in about 7 years. Nifty has been a clear winner overall, outpacing gold and silver in 12 out of 25 years in review. Silver only managed to inch past gold and Nifty in just 6 years. Per data, gold returns peaked at 29.9% in 2011, largely on the back of global financial uncertainty.

Years where gold has delivered 20%+ returns

Year	Gold Returns (in %)	Nifty Returns (in%)
2002	24.1	5.3
2008	24.5	-51.3
2009	24.9	77.5
2010	21.7	19.2
2011	29.9	-23.8
2019	22.9	13.5
2020	27	16.1

Source: CapitalMind PMS

Not just in India, gold has delivered returns exceeding domestic equity markets in most emerging countries like Turkey and Argentina. Per the DSP Netra October report, over the last 26 years, equity markets in Turkey have delivered 21.2% returns, as opposed to gold, which has generated 29.3% returns during the same period. Similarly, in Argentina, equity markets have delivered 38.4% returns, while gold saw 44.3% returns in the same time frame.

Stay put for Silver

However, if experts at Motilal Oswal Financial Services are to be believed, the performance of silver could either match or outperform gold in the medium to long term, as silver prices are expected to reach Rs 1,25,000 per kilogram on the Multi Commodity Exchange (MCX) and USD 40 per ounce on the COMEX within the next 12 to 15 months.

In fact, even the YTD (yield to date) for silver is higher at 31.1% as compared to gold, which stands at 22.6%. However, do not go overboard with silver allocation in your portfolio.