Gold delivers over 20% returns in 2024: A look at year-wise performance, and more

Gold has delivered stellar returns of over 20% so far this year, outpacing other popular safe investment avenues like fixed deposits and bonds, which offered modest yields of 6% and 7-8%, respectively.

The demand for gold and subsequent changes in its prices are dependent on many factors including global uncertainty, geopolitical tensions, market volatility and a shift in investor preferences. Gold’s increasing returns and the all-time highs of this year’s Diwali season added to its appeal. The risk premium associated with gold and the traditional and cultural demand for yellow metal in the domestic markets make it an important player in the Indian economy.

Industry Overview

ICRA, an independent investment information and credit rating agency, expects domestic gold jewellery consumption to grow by 14-18% in FY25 in value, driven majorly by favourable realisations. ICRA, in a release dated December 17, suggested that the key drivers of the increased consumption and value of the precious metal were consumer sentiment, festive demand and a higher number of auspicious and wedding days in the second half of FY25. Additionally, favourable monsoons boosted the income in rural households, leading to robust demand for the metal for cultural and investment reasons.

Furthermore, organised jewellers are expanding aggressively, with a projected 16-18% increase in the retail network in FY25, the report added.

“ICRA’s sample set of 15 large retailers, which accounts for ~75% of the organised market, is projected to record a healthy YoY expansion of 18-20% in FY2025. Planned store additions with a focus on Tier II & III cities, rising gold prices, shift in preferences towards branded jewellery and some likely pre-buying in Q4 FY2025 on account of a higher number of auspicious days in Q1 FY2026 shall drive growth. The customs duty cut is also expected to disincentivise unofficial imports, thus supporting the growth in organised trade,” Sujoy Saha, Vice President and Sector Head of Corporate Ratings at ICRA, said in a statement.

Gold performance

Gold prices have surged for seven consecutive quarters fueled by strong investor demand and global economic uncertainty. In an interview with Business Today, Sachin Jain, Regional CEO-India at World Gold Council (WGC), projected robust gold consumption in India, with demand expected to range between 700-800 tonnes for the year, supported by investment and jewellery purchases. With cryptocurrency growth and a stronger dollar threatening the rise of the precious metal and geopolitical tensions, increasing gold reserves with central banks and rising demand for gold in AI-driven devices, it will be interesting to see where gold turns in 2025.