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The trend of gold price - in INDIA - over the last decade!
Posted on: 08/Sep/2021 4:08:09 PM
Gold investors have gained pretty decent returns in the last 10-years in India.
The factors of a mix of a rally in international prices and a falling rupee has propelled prices, resulting in pretty decent annualized returns to investors.
Here is a look at the historical prices of gold in the last 10-years.
Aspects
Gold has grown almost 10 times in the last 20-years. This is for 24 karats and reflects 10 grams. Here is the data of year wise prices of 24-karats for 10-grams:
| Year | Price |
| 2011 | Rs 26,350 |
| 2012 | Rs 31,025 |
| 2013 | Rs 29,650 |
| 2014 | Rs 28,000 |
| 2015 | Rs 26,400 |
| 2016 | Rs 28,700 |
| 2017 | Rs 26,600 |
| 2018 | Rs 31,400 |
| 2019 | Rs 35,300 |
| 2020 | Rs 48,800 |
| 2021 | Rs 48,850 |
Observations
For almost 6-years between 2011 and 2017, gold prices barely moved in India. Thereafter, there was some marginal traction, but the real gains were notched in 2020 and 2021, following the discovery of Covid-19 infections. Gold being a safe haven asset, investors took shelter in gold and international prices rallied. In India, gold for 24 karats hit a peak near Rs 54,000 levels, after which there has been some dip.
Last 2 years
The sharp run-up in the last two years has prompted lesser investment physically in the precious metal. In fact, demand for gold in countries like India has reduced considerably. Physical demand over the last 1-year has also been jolted by covid-19 cases. Investors across the globe continue to look to invest in gold ETFs, where there may be reasonable demand going ahead.
The future
With the rally of the last 2-years, it`s unlikely that we will see any solid movement in the precious metal. In fact, our own belief is that there may be a long period of stability in the precious metal. Gold requires a trigger like a geo-political tension or a Covid to spark a rally.
Meanwhile, the global economy is gathering steam, which is good news for equities and not so for gold. At the moment, in the short to medium term, there are no triggers to spark a big rally in the precious metal. In India, the rupee movement against the dollar plays a big role in the movement of gold. If the rupee depreciates against the dollar, it leads to gold prices going higher and vice versa. The government of India in the Union Budget proposals this year announced a cut in import duty of gold. The government announced a cut in customs duty on gold and silver to 7.5% from 12.5%.
Import
India imports bulk of its gold requirements and hence the cut in the duty did make gold prices cheaper. Gold price movement in 2021, 22 karats at the local jewellers` Price
| Date | Price |
| 1st January | 48940 |
| 1st February | 48450 |
| 1st March | 44940 |
| 1st April | 43370 |
| 1st May | 44170 |
| 1st June | 46900 |
As can be seen in the table above, the sharp fall in gold prices in the month of Feb and March was largely to do with the reduction in import duties of gold.
So, the future!
Since then, gold in the international market has moved higher, which has pushed domestic markets higher.
- It`s likely that gold would hover in that range of Rs 45,000 to Rs 50,000. Much would depend on gold prices in the global markets, where the movement of inflation in the US and rising bond yields pose a major risk to gold prices.
- All in all, if you are looking to buy gold, you may do so only on declines, as there may be a little more downside left.
- If you are looking at consumption related buying, then there is no choice, but to go ahead and buy.
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