Gold outshines equities as prices soar past ₹ 1 Lakh mark

Amid rising global uncertainty and escalating trade tensions, investors are flocking to gold, the ultimate safe-haven asset.

The yellow metal has delivered stellar returns, surging over 30% in the past year, outpacing the Nifty's 8% gain. Over a three-year period also, gold has outperformed equities, bolstered by persistent geopolitical and economic risks. However, in the longer term – five-year – equities have delivered better returns.

On Tuesday, gold prices in India hit a historic high, breaching the ₹1 lakh per 10-gram mark, fuelled by mounting tensions between US President Donald Trump and Federal Reserve Chair Jerome Powell over interest rate cuts.

Chintan Mehta, CEO of Abans Financial Services said that heightened geopolitical risks post-COVID, including persistently high inflation, the Russia-Ukraine war and aggressive tariff policies by the US under President Trump, have driven investors toward the safety of gold.

"While Indian equities delivered respectable returns during this period, they were overshadowed by gold's defensive appeal. However, when we look at a horizon of 5 years or more, Nifty has generated approximately 180% absolute returns compared to gold’s 131%," stated Mehta.

Renisha Chainani, Head of Research at Augmont, believes that gold prices may extend this rally by 3-4% further, but technical indicators suggest near-term overbought condition. Therefore, one must exercise extreme caution because prices have skyrocketed in a relatively short period, stated Chainani.

The rise in gold prices has also increased the demand for gold exchange-traded funds (ETFs). Inflows into gold ETFs jumped 98.54% year-on-year to ₹1,979.84 crore in February 2025. The month of March, however, witnessed an outflow as investors rushed to book profit. Gold ETFs have given around 30% return in the past one year.

Narinder Wadhwa, Managing Director & CEO of SKI Capital Services, said that gold remains a compelling allocation in 2025, not just as a hedge, but as a tactical outperformer in times of macro dislocation.