Gold prices have jumped over 20% this year, outdoing popular stock market indices like Nifty and BSE Sensex, which only grew by about 12%. This rise is due to problems around the world, people buying gold as a safe investment, and central banks adding gold to their reserves. Still, gold also faces tough challenges ahead, including a stronger US dollar and the rise of cryptocurrencies like Bitcoin in 2025.
Gold has been steadily rising for the last seven quarters. According to ICRA, the average price of gold has gone up by 25% this fiscal year compared to last year, even though there were some small drops in price. Over the past five years, gold delivered nearly 15% returns in 2023 and 14.38% in 2022. In 2019 and 2020, gold prices shot up by about 24.59% and 28.24%, but fell slightly in 2021.
Recently, two big events affected gold’s popularity. First, the government cut customs duty on gold and silver to 6%, causing gold to drop by 6% in price. Second, results from the US elections strengthened the dollar, which can make gold less appealing to investors. The dollar has increased in value by 6.3% against other important currencies in the past month.
Despite these challenges, demand for gold remains strong. In November, gold imports soared to $14.86 billion, up from $7 billion in October, showing a huge increase of 112%. ICRA predicts domestic gold jewelry consumption will continue to grow by about 14-18% this financial year.
Looking ahead to 2025, gold will have to tackle three main events early in the year. First, Donald Trump will return as US President. His policies may add some uncertainty, which usually makes gold more appealing. Next, the Union Budget 2025 will be released, and third, the Reserve Bank of India will have new leadership.
Investment trends are also shifting as cryptocurrencies gain popularity. Bitcoin has recently surged by 140% this year and may even reach the $120,000 mark, drawing attention away from gold. An expert at HDFC Securities, Anuj Gupta, predicts that gold will face competition but still has chances for good returns. He estimates gold could hit Rs 82,000 in 2025, with strong resistance around Rs 84,500. Gupta believes gold is still a safe bet for the future.
(Note: The opinions in this article are those of the experts and do not reflect the views of Niftystat.)
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