The Union Budget announcement by Finance Minister Nirmala Sitharaman, reducing customs duties on gold to 6 per cent, has sparked renewed interest in the precious metal across India. Analysts suggest this move could potentially lower the cost of gold in the country. Over the past five years, gold has outperformed stocks in terms of returns, with Nifty 50 yielding 13.95 per cent compared to gold’s 16.21 per cent.
However, the longer-term horizon paints a different picture. Historically, stocks have shown superior returns over periods extending to 20 years. This contrast prompts a critical question for investors: should one lean towards gold or the stock market in the current economic climate?
Investment experts anticipate stable growth for both assets in the latter half of 2024. Projections indicate Nifty 50 could range between 25,600 and 26,000, while the price of gold may rise to Rs 81,500 per 10 grams by year-end, said Ajit Mishra, Senior Vice President of Research at Religare Broking Limited. Mishra advises investors to maintain a balanced approach and allocate funds according to their individual risk profiles.
According to a report by Live Mint, Rahul Kalantri, VP Commodities at Mehta Equities Limited, suggests adjusting portfolios to increase exposure to gold amidst expectations of further increase in gold prices post a potential US rate cut. He advises raising allocations from the typical 10-15% to 30-35% in precious metals.
Presently, stocks and gold are both achieving record highs, each serving distinct investment objectives. Stocks are renowned for their potential to deliver high returns, outpacing inflation over the long haul. Conversely, gold is valued as a secure asset during periods of economic uncertainty.
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