Gold Vs Sensex In the Past 5 Years: Whenever the times are tough in the economy, investors tend to rely more on gold rather than equities. The recent years saw major ups and downs mainly due to the coronavirus pandemic and the Ukraine-Russia war. Experts said the uncertainty in the past five years has given a boost to gold prices while keeping the Sensex volatile rendering its returns lower than the safe-haven metal.
In the past 5 years since July 2018, gold has jumped 99 per cent. The Sensex, on the other hand, has risen 77 per cent during the period.
On July 30, 2018, the price of 24k gold had stood at Rs 30,850 per 10 grams, which has now jumped about 99 per cent to nearly Rs 61,400 as on July 21, 2023. The Sensex as on July 30, 2018, had stood at the 37,550 level, which has risen by about 77 per cent to about 61,800 now.
Jateen Trivedi, vice-president and research analyst at LKP Securities, said, “Gold in the past five years has benefited from many global uncertainties, including the US-China trade war (running from 2019), the pandemic in 2020, the liquidity issue in 2021, the Russia-Ukraine war and the high inflation globally in 2022.”
He added that as the protection of money continued during the period, gold in domestic prices hit over Rs 60,000 from Rs 30,000 in July 2018, whereas the Sensex has struck 66,500 from roughly 37,000 levels.
Hareesh V, head (commodities) at Geojit Financial Services, said, “In the past 5 years, gold prices in India rose more than international prices due to a weak Indian rupee. The rupee was down 31 per cent from 63 per dollar in 2017 to 82 per dollar now.”
While the gold price in India has jumped 99 per cent since 2018, the metal in the international market rose just 60 per cent — roughly from $1,230 an ounce to $1,960 an ounce.
Gold Vs Sensex: What Investors Should Know
Stating that investors need to look at a longer-term trend to understand the market dynamics, Hareesh said the Sensex has surged a whopping 320 per cent since 2012, while the gold has just risen 140 per cent.
“During normal periods, the Sensex has given better returns than gold. However, the last five years were caught up with many global uncertainties, both economic and political, which boosted gold as a safe-haven asset, thus pushing up its prices,” Hareesh told news18.com.
Weak economic prospects, supply chain uncertainty during the pandemic, geopolitical tensions, central banks buying gold to boost reserves, and dollar uncertainty were the factors that triggered gold buying, he said.
In the longer timeframe, since 2012, the Sensex has given positive returns except for two instances — a minor crash during 2015-March 2016, and a major crash during the pandemic. “However, during the positive times between 2011 and 2018, gold remained range-bound between Rs 24,500 and Rs 33,000, following which uncertainties triggered a breakout,” Hareesh said.
LKP Securities’ Jateen Trivedi said investors should continue with a balanced portfolio where a good amount of allocation should be kept in gold of around 25-30 per cent at least, as the US debt is at the highest levels, which going forward can be another trigger for uncertainty to benefit gold and keep the Sensex volatile.
Hareesh also said, “There is still an uncertainty in the market. Economic indicators show China is weakening. It favours gold prices. Investors can consider keeping around 20 per cent of the investment portfolio in gold.”
Currently, BSE Sensex stands at around 67,000, while the NSE Nifty to the sub-19,800 level. The price of 24-carat gold now stands at Rs 60,590 per 10 grams.
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