Samvat 2080: Gold gains 32% since last Diwali, highest since 2011; what to expect next

Gold investment: The year Samvat 2080 saw significant growth in the prices of gold and silver, with both precious metals delivering returns of 32% and 39% respectively. This was despite a 9 percentage point reduction in import duty, leading to a 9% fall in domestic gold prices shortly after the announcement. These returns are the highest since Samvat 2067.

This year, Gold ETFs, silver ETFs, Nifty, and the Sensex are experiencing significant growth, with returns of 30%, 28%, 27%, and 25%, respectively. As per Zerodha Fund House, the number of gold ETF folios increased from 48 lakh to 57.1 lakh within a one-year period ending in September 2024.

A notable year prior to Samvat 2080 was Samvat 2067 (2011), when gold returned 36% and silver 40%. During that time, gold prices soared above $2,000 per ounce, and silver prices reached $49 per kilogram. The Indian precious metals market also experienced significant growth.

The price gains witnessed in Samvat 2080 can be attributed to three key global factors -- geopolitical tensions, US presidential election, and global interest rate policy.

Samvat 2080 clearly belonged to both silver and gold exchange traded funds (ETFs), as they outperformed both Nifty50 and BSE Sensex. 

The World Gold Council (WGC), in its most recent report on gold demand trends for the September quarter, noted that gold prices have been rising due to geopolitical uncertainty. This uncertainty has been fueled by increased tensions in the Middle East and the highly contested US presidential election. Additionally, the changing global interest rate policy has further supported the upward trend in gold prices.

In comparison, in Samvat 2080, the Indian stock markets achieved historic highs, with the Sensex and Nifty witnessing gains of approximately 23% and 25%, respectively.

The BSE Sensex dropped by 553 points, or 0.69%, closing at 79,389, while the National Stock Exchange’s Nifty50 saw a decline of 135.5 points, or 0.56%, ending at 24,205.35. In October, the Nifty50 experienced a significant fall of over 6%, marking the sharpest drop in a month in four-and-a-half years. This decline was primarily driven by weaker-than-expected earnings reported by companies in the quarter ending September 30, leading to concerns about the sustainability of the recent market rally.

What to expect in Samvat 2081?

Gold is projected to have a positive uptrend in the near future. The current trading of gold is influenced by worries about the US fiscal deficit and tariffs, which could potentially result in inflationary effects. Additionally, concerns related to the US election and geopolitical issues arising from the conflict in the Middle East are contributing to the strength of gold.

Nigam Arora, a US-based investment consultant and author of the Arora report, said: “The course of gold will depend on the US election. It depends not only on who will become the President when results are out next week, but also on if there is a sweep of the House and the Senate by one party. Here is an important point for investors. The recent leg-up in gold occurred after a very long technical base. This tells us that if there is a pullback in gold, investors should consider buying on the pullback.”

"Looking ahead to Samvat 2081, we anticipate that the Indian market will continue to trend upward, aiming for the 28,400 level by Diwali 2025. This target aligns with the rising trendline on the yearly chart that connects major highs since 2014, as well as the measuring implications of previous significant rallies. However, the upward movement is expected to be accompanied by volatility rather than a straight path. We believe healthy correction will make the market healthy for long-term up trend," said Bajaj Broking Research Team.

"With Nifty returning 25% and Nifty 500 returning 30% in Samvat 2080, investors should be happy. But the 6.2% correction in October, the first above 5 percent correction in 54 months, has triggered anxiety over the market performance, going forward. Of serious concern is the relentless FII selling in October amounting to Rs 113858 crores through the exchanges. Given India’s elevated valuations and concerns over deceleration in earnings growth, FII selling might continue, impacting the benchmark indices," said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.