Mumbai: Gold as an asset class has performed well leading up to Diwali this year, with investors earning over 21% returns on their investment. In comparison, investments in companies on the benchmark Nifty 50 index gave returns of around 9%.
Gold prices hit record highs in India in September, in the backdrop of worries of a global economic slowdown, the US-China trade war, which have otherwise taken a toll on other asset classes.
Indians traditionally buy gold and silver during the Diwali, especially on Dhanteras, which marks the start of the festival of lights, and is considered an auspicious occasion to purchase gold.
With prices at record highs, gold and silver haven't found many takers in the recent times. But the precious metals continue to retain their edge over other asset classes like equities and debt.
Experts suggest investing in paper gold such as sovereign gold bonds or gold exchange-traded funds, instead of physical purchases of the metal, as the former do not involve storage costs, making charges or discounted resale values and doubts over purity of the metal.
In the run-up to Diwali in 2017, gold gave a negative return of 1%. In the following year, the returns were a little over 6%.
In comparison, in 2016-17 and 2017-18, the Nifty 50 gave returns of 5% and 26%, respectively.
In 2020, the upside momentum in gold is expected to continue. The US presidential elections, US-China trade tensions, and worries of global economic slowdown could push gold prices to over $1,600 per ounce in global markets and 41,500 rupees per 10 gm in the domestic markets, analysts said.
