The year 2024 proved to be a fruitful one for safe haven investments such as gold and silver, which outperformed riskier equities by a significant margin. The demand for these precious metals remained strong throughout the year, driven by geopolitical tensions and uncertainty surrounding US interest rate cuts.
Gold and silver delivered impressive returns of 21% and 17%, respectively, in 2024. In contrast, equity markets saw a more modest rise, with the BSE Sensex and NSE Nifty50 posting gains of 8% and 9%, respectively. Despite this, stock markets provided good returns to investors for most of the year, with record highs being reached in September.
Commodity-based ETFs, specifically gold and silver, offered average returns of 20% each in 2024. The price of gold started the year strong, dipped briefly in February, and then reached a record high in October. This performance bodes well for the gems and jewellery industry in India, with expectations of substantial growth driven by domestic demand, export potential, and strategic initiatives.
Looking ahead to 2025, experts anticipate a more favorable outlook for equity markets. Concerns such as global interest rates, geopolitical uncertainties, and high valuations are expected to moderate, with government spending and interest rates likely to play a crucial role. With one-year forward multiples for the broader markets slightly below long-term averages and expectations of earnings growth, the equity market is poised for a positive trajectory.
Overall, the performance of gold and silver in 2024 highlighted the importance of diversifying investment portfolios to include safe haven assets. As uncertainties continue to prevail in the global economy, these precious metals have proven to be reliable stores of value and sources of strong returns for investors.
