Gold, a precious metal revered for centuries, has recently hit an all-time high price, sending ripples through global markets. This lustrous element plays a crucial role in various industries, particularly electronics. Gold’s excellent conductivity and resistance to corrosion make it indispensable in manufacturing smartphones, computers, and other electronic devices. Its unique properties ensure reliable connections in circuit boards and enhance the performance of electronic components. Beyond electronics, gold finds applications in aerospace, medicine, and even environmental technology, highlighting its versatility and importance in modern innovation.
Moreover, gold serves as a cornerstone for economic stability in many countries. Central banks worldwide hold gold reserves as a safeguard against economic uncertainties. This precious metal acts as a hedge against inflation and currency fluctuations, providing a sense of security during turbulent times. Gold’s enduring value and global acceptance make it a reliable asset for nations to maintain financial stability and bolster their economic standing in the international arena.
Gold Price
Gold prices are currently trading at ₹82,599 on 17th January 2025. Currently at 4:23p.m (IST) the yellow metal is trading at USD 2,704 per ounce in the international markets.
NIfty VS Gold’s Performance in 2024
In 2024, gold has performed well, delivering solid returns amid global uncertainties. As of the latest data, the price of gold has surged by approximately 29% in 2024 while nifty rose by 8.8%. Gold prices were driven by rising inflation concerns and geopolitical tensions, making it a preferred asset for risk-averse investors seeking stability.
Gold vs. Equity: A Safe Investment for Hedging
When compared to equities, gold’s performance has been more stable, especially during market downturns. While equities can offer higher returns, they are also more volatile. Gold, on the other hand, provides a hedge against the risks posed by stock market fluctuations. In 2024, while equities have seen varied performance, gold’s consistent returns make it a more reliable choice for conservative investors seeking to preserve wealth.
Reasons for rising Gold Prices
Rising Economic Uncertainty Across the Globe
Global economic uncertainty has been on the rise, with concerns about inflation, recession risks, and unstable financial markets. These factors typically drive investors toward gold, which retains its value even during challenging economic periods, making it a safe bet when traditional investments, like stocks, face significant risks.
Rising World Tension: Trump’s Victory and US-China Trade War
The political volatility surrounding Trump’s potential re-election and the ongoing trade war between the US and China have added fuel to global uncertainties. These tensions often lead investors to gold as a protective asset, helping them shield their wealth from geopolitical risk and market unpredictability.
Rising USD and Gold as a Hedge for Domestic Currency
As the USD strengthens globally, it can impact domestic currencies, leading to inflationary pressures. In such times, gold acts as an excellent hedge for domestic currencies, helping to preserve wealth. It tends to hold its value better when the value of a country’s currency declines, making it an attractive investment for currency-sensitive investors.
Rising Demand for Semi-Conductors and GPUs
The growing demand for semiconductors and graphics processing units (GPUs) for AI, which use gold in their circuits, has led to increased gold consumption. As technology continues to advance, the demand for these components is rising, leading to higher demand for gold, which could contribute to price appreciation in the future.
Conclusion: Gold vs. Equity
When deciding between gold and equities, the choice depends on an investor’s risk appetite. Gold is better suited for those seeking stability and protection from market volatility, while equities offer higher returns but come with more risk. With economic and geopolitical tensions likely to persist, gold could continue to see growth.
As for whether gold will surpass ₹1 lakh, market dynamics, and demand factors suggest that this milestone could be within reach in the future, especially if uncertainties continue to weigh on global markets.
Written By: Dipangshu Kundu
Disclaimer
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