According to a recent survey conducted by the Indian Gold Policy Centre at IIM Ahmedabad, gold has consistently provided higher returns to investors than equity in every period over the last 20 years despite rising prices. Not only this, gold has reduced the risk for investors when investing in both equities and gold. This can be understood with an example. For example, if an investor’s portfolio consists of 80 per cent equity and 20 per cent gold, then gold has helped offset the loss in equity.
Investing in gold for 1 year has yielded a return of 34.1 per cent; for 3 years, 16.8 per cent; for 5 years, 14.8 per cent; for 10 years, 12.5 per cent; for 15 years, 11.5 per cent; and for 20 years, 12.9 per cent. Whereas investment in equity for 1 year has yielded a return of 2.6 per cent, for 3 years, 11.6 per cent; for 5 years, 14.6 per cent; for 10 years, 9.9 per cent; for 15 years, 11.5 per cent; and for 20 years, 12.3 per cent.
Thus, gold has yielded a maximum return of 34.1 per cent, while equity has yielded a maximum return of 14.6 per cent; in other periods, gold has also provided higher returns than equity. These figures indicate that investing in gold in current times is more profitable than investing in equities.
Consistent with the survey, 56 per cent of people who invest in gold have an annual income between Rs 2 lakh and Rs 10 lakh. Meanwhile, the price of gold has doubled from 2022 to March 2025, but there has been no increase in the savings of people of this income group. As a result, due to a lack of sufficient savings, these individuals are currently unable to purchase gold.
The price of 10 grams of 24-carat gold crossed the 91,000 level in the bullion market on March 18, 2025, and it is likely to surpass the Rs 1 lakh mark this year. Obviously, due to the increase in gold prices, the general public is unable to afford gold. Not only this but due to the fear of overspending, they are also avoiding buying gold jewellery for their wedding.
The jewellery industry is concerned about the current situation because the increased prices have significantly reduced demand for jewellery. Therefore, to address the current crisis and enable the common man to purchase gold, gold jewellery manufacturers are emphasising the sale of 14-carat gold. Advertising and other promotional methods are also being employed in this matter. Along with this, efforts are also being made to hallmark 9-carat gold so that the common man can maintain the joy of the wedding by purchasing low-carat gold according to his income.
According to a report by the World Gold Council (WGC), India’s demand for gold reached its highest point in 2024. However, investors who initially purchased gold to earn a profit are now taking advantage of this situation by selling gold coins and jewellery. According to the World Gold Council, 34.8 tonnes of gold were sold for cash in the March quarter of 2023, while 38.3 tonnes of gold were sold in March 2024. Along with an estimate, more than 40 tonnes of gold are likely to be sold in the last quarter of the current financial year.
After 78 years of independence, the price of gold has skyrocketed. When India became independent, the cost of 10 grams of gold was Rs 88.62. In 1964, its price fell further to Rs 63.25. In this way, the price of gold has increased from a few rupees to a level of 91,000 rupees as of March 18, 2025.
There are many reasons for the increase in the price of gold, the most prominent of which are the economic policies being adopted by US President Mr Donald Trump, the possibility of a trade war starting at the global level, the chance of a recession on in the US, speculation of the US Federal Reserve cutting policy interest rates, the softening of the US dollar, a 5 per cent fall in the US dollar index, subsequently, it reaching its lowest level in last 4 months, weakness in the rupee against the dollar, the persistence of uncertainty at the global level, continuous purchase of gold by central banks, etc. It is worth mentioning that in 2025, the Reserve Bank of India also purchased 3 tonnes of gold, resulting in an increase in gold reserves to 879 tonnes.
The price of gold is also rising due to increased geopolitical tensions in certain parts of the world. The demand for gold has increased recently due to increased investment in Gold ETFs. Meanwhile, due to the decline in the stock market over the past few months, investors are turning to gold. Apart from these, the fear of inflation remains prevalent in the country and abroad. However, due to the decrease in food prices in India, the retail inflation rate based on the Consumer Price Index (CPI) has dropped to a 7-month low of 3.61 per cent in February; however, this cannot be considered permanent. There is a possibility of a price increase for vegetables again in the summer.
India is unable to supply the domestic demand for gold, as the required amount of gold is not produced here. Therefore, in this case, our country is entirely dependent on exports.
In the 11 months of 2024, India imported a total of US$47 billion worth of gold, the highest level ever recorded, while in 2023, the country imported a total of US$42.6 billion worth of gold. Notably, China is the world’s largest gold buyer. It purchased 224.88 metric tons of gold in 2023, while Turkey was in second place, buying 130.64 metric tons of gold.
Due to the current global uncertainties, geo-political tensions in some parts of the world, current policies of US President Trump, the current stance of the US Federal Reserve, the possibility of a recession in the US, a fall in the dollar index, continuous weakening of rupee against the dollar, recent fall in the stock market, inflation remaining at high level etc., there is a rising trend in the price of gold, which is not beneficial for the common man. Still, such a situation is helpful for high-income investors.
Satish Singh is a senior columnist, economics expert, Head of the Learning & Development Department, and Assistant General Manager at the State Bank of India, Ahmedabad Circle, GIFT City, Gandhinagar, Gujarat.
