India has a long-standing relationship with gold, making it one of the most sought-after investment options in the country. In recent years, the country has witnessed a substantial boom in the gold market, which makes gold a popular choice among investors looking for stable and consistent returns.
Before we take a look into the future of gold investments in India, it is essential to understand the historical trends and the factors that have shaped its significance and explore how it is poised to evolve in the ever-changing landscape of the Indian economy.
Performance of gold as investment over the years
Gold has shown consistent growth in India over the last 50 years, with its CAGR remaining healthy for the most part.
The CAGR of gold in India has varied over different time periods. For example, in the last 5 years (from 2018 to 2023), the CAGR of gold in India was around 14.8%, which outperformed the CAGR of other investment options such as stocks and mutual funds. Let’s look at gold’s performance over a larger time period -
Considering the price of the gold as 63,000 in May 2023, below is the gold’s performance over the last few years.
CAGR of gold in last -
1. 5 years (2018 - 2023) - 14.8%
2. 10 Years (2013 - 2023) - 7.8%
3. 15 Years (2008 - 2023) - 11.4%
4. 20 Years (2003 - 2023) - 11.4%
5. 25 Years (1998 - 2023) - 11.6%
As it can be seen there is a movement in gold returns over the years, it becomes necessary to understand the factors impacting gold prices to gauge some insights about the future of gold.
Factors affecting gold prices in India
There are various factors that influence gold prices in India. Some of these factors are domestic, while others are global. India's consumers, investors, and policymakers must understand these factors to make informed decisions related to gold investments.
Indicators supporting promising future of gold in 2023
Inflation and its impact on future of gold: According to reports, with every 1% rise in inflation, demand for gold soars by roughly 2.6% as it is often seen as a hedge against inflation. In 2023, Global inflation trends are pointing towards a potential rise, which can spike the gold demand giving the future of gold a positive outlook.
Global economic growth & Interest rates: The International Monetary Fund (IMF) has projected a global economic growth rate of 3.5% for 2023, which is lower than the 3.7% growth rate projected for 2022. And in order to tackle slow economic growth, central banks are expected to maintain low interest rates in 2023. Seeing a downward trend in global economic projections, investors might seek a stable asset like gold to invest their money.
Geopolitical events impacting on future of gold: Geopolitical risks and uncertainties can create economic uncertainty, leading to a rise in demand for gold. The year 2023 is already facing political and economic challenges, such as the US-China trade war, the COVID-19 pandemic, and Brexit, making gold an attractive investment option for investors looking to diversify their portfolio.
All the above factors will significantly influence the demand and supply dynamics in the gold market. With a lot of central banks buying and accumulating gold to strengthen their currency in uncertain times, it could influence the future of gold prices and help us predict where the gold market is headed in the coming years.
What can be predicted about the future of gold?
While it is important to note that no prediction can guarantee absolute accuracy, these projections can provide valuable insights about the future of gold.
The basis for these predictions/projections is expected continuation of low-interest rates, high inflation, and global tensions that could drive up the demand for gold.
A lot of experts and financial institutions are bullish on gold prices in 2023, with some predicting prices to cross ₹70,000 per 10 grams indicating a positive trend for potential investors. RBI has released a statement mentioning purchasing of 10 tonnes of gold in March 2023 abid economic conditions.
As we analyse the price movements of gold from the beginning of the year until May, there is compelling evidence to suggest that the future of gold prices is on an upward trajectory. With a significant spike of approximately 16% from ₹54,000 per 10 grams to ₹63,000 per 10 grams, investors are presented with a strong sign that gold prices may touch ₹70,000 by the end of the year. This makes it a perfect time to start or increase investment in Gold.
Best ways to invest in gold in 2023
Gold offers various investment options like physical gold, digital gold, Gold ETFs, Gold bonds, and gold leasing, each with its own pros and cons. Yet, its reliability and consistent returns remain constant. This stability helps maintain portfolio balance.
Innovative instruments like gold leasing now even provide additional returns in addition to gold price appreciation, completely transforming the perception of gold as an investment.
A few apps/websites have recently introduced gold leasing options, considered as the future of gold investment, expanding the accessibility of this investment avenue for investors of all kinds. Gold+ program by Gullak app currently provides highest returns on gold in India. It provides an assured return of an extra 5% in grams of gold (compounded every year) in addition to the historical average 11% gold price appreciation making effective returns up to 16% p.a.
Gullak makes sure of safety and security by verifying the jewellers and taking 100% Bank/Corporate guarantee. Gullak also makes it completely flexible for the users to withdraw anytime without any penalty.
The future of gold in India looks promising, as it has shown consistent growth over the years. Investing in gold in 2023 presents a unique opportunity for investors seeking stability and long-term value.
Understanding the gold market, economic indicators supporting gold investment, and ways to invest in gold are essential for making informed investment decisions. Gold leasing is an excellent investment option for investors looking to diversify their portfolios and benefit from the value of gold with extra returns.
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