Has Gold Surpassed Equities for the Fourth Consecutive Diwali Cycle?
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Synopsis
Gold has outshined equities again this Diwali season, marking the fourth consecutive year of dominance. With significant gains and forecasts indicating further potential, investors are keenly watching this trend. What does this mean for the future of equities and gold? Let's dive into the numbers and expert opinions.
Key Takeaways
- Gold has outperformed equities for the fourth consecutive Diwali cycle.
- MCX gold prices have risen by approximately 40% since last Diwali.
- Silver also outperformed equities, driven by industrial demand.
- Gold's price peaked at an all-time high of $3,683 per troy ounce.
- Analysts caution about the sustainability of gold’s rally.
New Delhi, Sep 24 (NationPress) Gold has consistently outperformed Indian equities for the fourth consecutive Diwali-to-Diwali cycle, maintaining a remarkable trend where the yellow metal has surpassed equities in seven of the last eight years.
The current price of 24-carat gold (1 gram) stands at Rs 11,431 as of 10:05 am, based on data from the India Bullion and Jewellers Association (IBJA).
Since last Diwali, MCX gold has appreciated by about 40 percent, while the Nifty 50 index has only increased by roughly 5 percent during the same period. In 2024, the Diwali-to-Diwali return for gold was 32 percent, in contrast to a 24 percent rise in the Nifty index. In the previous year, gold climbed by 21 percent, whereas the benchmark index advanced by only 10 percent.
On September 17, spot prices reached an astonishing $3,683 per troy ounce—an all-time high—reflecting a 43 percent increase this year before retreating due to a stronger-than-expected Federal Reserve stance.
Market analysts have highlighted several factors fueling this bullion rally, including anticipations of US Federal Reserve policy easing and heightened demand for safe-haven assets amid geopolitical tensions and tariff-related uncertainties. Furthermore, reports indicate that central banks, especially in Asia, are increasingly stocking up on gold to decrease reliance on the dollar.
Experts predict that gold may continue to outperform for another year, after which equities might begin to narrow the gap.
In addition, silver has also surpassed Indian equities for the third consecutive year, driven by industrial demand from sectors such as solar panel manufacturing, semiconductors, and electric vehicles.
The price of silver (1 kilogram) was recorded at Rs 1,34,050 at market close yesterday, as per data from the IBJA.
US brokerage firm Goldman Sachs has forecasted that gold could soar to $5,000 an ounce if even a fraction of Treasury holdings is shifted into the metal.
With signs of softening in US labor data, the Fed’s recent dovish remarks have diminished the opportunity cost of holding gold, attracting risk-averse investors to bullion.
However, analysts have cautioned that this rally might be overextended and reminded investors of the past when gold peaked in 2011 before entering a prolonged decline as speculative inflows reversed.
Point of View
I emphasize that the consistent performance of gold over equities reflects broader market sentiments and economic indicators. It is crucial for investors to understand these dynamics, especially in a volatile economic environment. Our commitment to providing accurate and timely information ensures that our readers are well-informed to make strategic financial decisions.
NationPress
24/09/2025
Frequently Asked Questions
Why is gold outperforming equities?
Gold is outperforming equities due to factors such as geopolitical tensions, inflation concerns, and a shift toward safe-haven assets, which have made investors more inclined to choose gold.
What are the future projections for gold prices?
Experts predict that gold prices could reach as high as $5,000 per ounce if a significant portion of Treasury holdings is transferred into gold.
How does the performance of silver compare to gold?
Silver has also shown strong performance, surpassing Indian equities for the third consecutive year, primarily driven by industrial demand.
What should investors be cautious about?
Investors should be cautious about the potential overextension of gold’s rally and remember that past peaks have often been followed by declines.
How has the Federal Reserve impacted gold prices?
The Federal Reserve's dovish comments and signs of softening labor data have reduced the opportunity cost of holding gold, making it more attractive to risk-averse investors.
