Gold's Unprecedented Surge in FY25

Gold has once again proven its worth as a safe haven investment, emerging as the best-performing asset class in the financial year 2024-25. With a staggering 41% gain in USD terms and 33% in rupee terms, gold prices soared to unprecedented levels, exceeding US$3,125/oz (Rs 88,946 per 10 grams). This remarkable performance is largely attributed to its status as a secure investment during times of global instability, further bolstered by central bank acquisitions in recent years.

Central Banks' Golden Strategy

Gold demand reached its highest level in 15 years, driven by substantial investment flows and persistent central bank acquisitions. The Reserve Bank of India, for instance, emerged as the third-largest official purchaser over both three and five-year periods, with gold now constituting more than 11% of its foreign exchange reserves.

Indian Equities: The Long-Term Champions

Despite gold's impressive FY25 performance, Indian equities have demonstrated superior returns over extended periods. The Nifty 50 has achieved a 13% yearly price increase and a 14.4% total return (inclusive of dividends) across 20 years, outperforming gold during comparable timeframes.

Looking Ahead

As geopolitical tensions and economic uncertainties persist, the fundamental factors supporting gold demand remain robust. Central banks are expected to continue their significant gold purchases throughout 2025, playing a pivotal role in the overall demand dynamics.