Gold vs Equity: Over the long term, all that glitters is Nifty

Gold has not been able to beat Nifty consistently for 3 years.

Even as Gold has hit an all-time high, the yellow metal has failed to beat the returns of equity indices such as Nifty consistently over the longer run.

According to data, in a 20-year period and 10-year period, Nifty has managed to outperform MCX gold returns. However in the last five years, Gold has outperformed Nifty with a 16.21 percent against a 13.95 percent return, respectively.

Nifty beats gold over long term

The annual return data for 20 years shows gold has outperformed equities during economic challenges. For instance, gold had outperformed Nifty during FY 2008 to FY 2009, which was affected by the 2008 global financial crisis. A similar outperformance was visible in FY 2011 to FY 2012 due to the US Debt ceiling crisis in 2011. The performance was repeated in FY20 and FY23, which saw Covid and Russian Ukranian war, respectively.

Nifty vs Gold performance in the last 20 years

Another interesting data is gold has not been able to beat Nifty consistently for three years.

While Nifty had outperformed Gold in FY24, Gold has been the outperformer in the year so far as the yellow metal has been on a roaring run since mid February as investors expect the US Federal Reserve to cut interest rates this year. Additionally, geopolitical tensions in the Middle East and Ukraine, coupled with central bank purchases have helped gold soar.

"From the beginning of 2024, Gold has been on a strong footing, having risen by ~6% as against the broader equity market ( Nifty 500) returning only ~4%. The slew of elections lined up in this fiscal year bodes well for Gold. The reason being that during times of uncertainties, investors tend to park their money in safer asset classes," said Naveen KR, smallcase Manager & Senior Director - Windmill Capital.