Gold vs Sensex in last 5 years: Whenever times are tough in the economy, investors rely more on gold than on equities. Recent years have seen major volatility mainly due to the coronavirus pandemic and the Ukraine-Russia war. Experts said uncertainty over the past five years has fueled this gold prices while keeping Sensex Being volatile, its returns are lower than those of safe-haven metals.
Gold has rallied 99 per cent in the last 5 years since July 2018. On the other hand, the Sensex has gained 77 per cent during this period.
The price of 24k gold was Rs 30,850 per 10 grams on July 30, 2018, which has now jumped by almost 99 percent to around Rs 61,400 on July 21, 2023. On July 30, 2018, the Sensex was at the level of 37,550, which has now increased by about 77 percent to about Rs.61,800.
“Gold has benefited from several global uncertainties over the past five years, including the US-China trade war (ongoing since 2019), the pandemic in 2020, liquidity issues in 2021, the Russia-Ukraine war and high inflation globally in 2022,” said Jatin Trivedi, vice-president and research analyst at LKP Securities.
He said that due to the continued safety of funds during this period, home prices have moved from Rs 30,000 to over Rs 60,000 in July 2018, while the Sensex has risen from around 37,000 levels to 66,500.
Harish V, Head (Commodities), Geojit Financial Services, said, “Over the past 5 years, gold prices in India moved higher than international prices due to a weaker Indian rupee. The rupee has fallen by 31 per cent from 63 per dollar in 2017 to 82 per dollar now.
While gold prices in India have risen 99 per cent since 2018, the metal has risen only 60 per cent in the international market – from around $1,230 an ounce to $1,960 an ounce.
Gold vs Sensex: What investors should know
Stating that investors need to look at the long-term trend to understand the market dynamics, Harish said Sensex has gained 320 per cent since 2012, while gold has gained 140 per cent.
“During normal periods, Sensex has given better returns than gold. However, the past five years were marred by several global uncertainties, both economic and political, which promoted gold as a safe-haven asset, driving up its prices,” Harish pointed out. news18.com,
Weak economic prospects, supply chain uncertainty during the pandemic, geopolitical tensions, gold buying by central banks to shore up reserves and dollar uncertainty were factors that fueled gold buying, he said.
In the longer time frame, since 2012, the Sensex has given positive returns except in two cases – a small fall during 2015-March 2016, and a major fall during the pandemic. “However, during the positive times between 2011 and 2018, gold remained range-bound between Rs 24,500 and Rs 33,000, after which uncertainties triggered the breakout,” said Harish.
Jatin Trivedi of LKP Securities said that investors should continue with a balanced portfolio where a good amount of allocation should be kept in gold at least around 25-30 per cent as the US debt is at the highest level which could further trigger the uncertainty to benefit gold and keep Sensex volatile.
Harish also said, ‘There is still uncertainty in the market. Economic indicators show that China is weakening. This is in favor of gold prices. Investors can consider keeping around 20 per cent of their investment portfolio in gold.
Currently, the BSE Sensex is around 67,000, while the NSE Nifty is at 19,800. The price of 24 carat gold is now Rs 60,590 per 10 grams.