Gold Was India's Best-Performing Asset Class in 2024

January 19, 2025

Gold outshined virtually every other Indian asset in 2024.

Despite a moderating price in November and December, gold still emerged as India’s top-performing asset class, posting a 21 percent annual gain. This compares to a 26 percent return in dollars.

The only major asset class to outperform gold was Bitcoin with its big price surge after the U.S. presidential election.

Gold outperformed despite rupee weakness in the face of a dollar rally that drove the Indian gold price down by 4 percent in November and 2 percent in December. 

According to the World Gold Council, geopolitical risk and a positive trend in global ETF flows minimized the end-year slide in the gold price.

Indian Gold Demand

Despite falling prices, gold jewelry demand in India dipped in December. According to the World Gold Council, “Consumers have been hesitant about buying gold jewelry due to high and fluctuating prices and the inauspicious period in the Hindu calendar, which runs from mid-December to mid-January.” 

However, based on anecdotal evidence, it appears physical investment demand for gold bars and coins has remained steady.

Investment demand was also reflected in gold flows into Indian ETFs. Gold-backed funds in the country reported their eighth straight month of inflows in December.

According to the World Gold Council, “Ongoing volatility in equity markets, coupled with the general bullish sentiments surrounding gold, continued to support investor demand."

Indian ETFs added 15 tonnes of gold in 2024 totaling $1.3 billion. It was the largest annual inflow on record and nearly four times higher than in 2023. Assets under management (AUM) by Indian gold-backed funds grew by 63 percent. 

Based on preliminary data, Indian gold demand was strong in 2024. It got a boost in July after the Indian government cut taxes on gold and silver imports by more than half, lowering duties from 15 percent to 6 percent. The move initially pushed prices down by about 6 percent and drove record gold imports in August. 

Indian Gold Imports Revised Lower

Indian gold imports were reported at record levels for the year, but the government recently revised the numbers lower by 82 tonnes for the period between April to November. The Ministry of Commerce said the revisions were due to double counting during a migration of data between two platforms. 

With the revisions, gold imports were down modestly in 2024, but the value of imports increased by 21 percent due to the rising price of gold.

Based on preliminary data, India imported 724 tonnes of gold. This compares with 744 tons in 2023.

Indian Central Bank Gold Buying

The Reserve Bank of India has ranked among the world's biggest central bank gold buyers in 2024.

The Reserve Bank of India (RBI) paused gold buying in December but still ranked among the biggest central bank gold buyers in 2024, increasing its gold reserves by 72.6 tons.

Gold currently accounts for about 10 percent of India’s total reserves, the highest level since 1999.

An Indian economist told the Times of India that the push to accumulate gold was based on both political and economic reasons. He said that the "reliability" of the U.S. dollar has "diminished." He noted the "noticeable decline" in the confidence in U.S. dollar assets.

Another economist told the Times, “It makes a lot of sense (to invest in gold), given the increased volatility in the FX market, elevated interest rates in the U.S., and, of course, also as the central banks in each economy would like to diversify the asset classes in which they are parking their reserves.” 

India has also been bringing its gold back into the country. Last spring, the Reserve Bank of India repatriated 100 tons of gold, moving it from the UK to vaults within India's borders, and it recently brought more gold home.

Gold Plays an Important Role in the Indian Economy

India ranks as the world's second-largest gold-consuming country.

Indians historically have an affinity for gold. While it's hard to know for sure exactly how much gold Indians hold because of the amount of metal circulating in the underground economy, the best estimate is that Indian households own more than 25,000 tons of gold. 

Gold is deeply interwoven into the country’s marriage ceremonies, along with its religious and cultural rituals. Festival seasons typically boost gold demand.

Indians have long valued the yellow metal as a store of wealth, especially in poorer rural regions. Around two-thirds of India’s gold demand comes from beyond the urban centers, where large numbers of people operate outside the tax system. Many Indians use gold jewelry not only as adornment but as a way to preserve wealth.

In the West, gold is generally viewed as a luxury item. Not in India. Even poor Indians buy gold. According to a 2018 ICE 360 survey, one in every two households in India had purchased gold within the last five years. Overall, 87 percent of Indian households own some gold. Even households at the lowest income levels in India hold some of the yellow metal. According to the survey, more than 75 percent of families in the bottom 10 percent of income managed to buy some gold.

The yellow metal was a lifeline for Indians buffeted by the economic storm caused by the government's response to COVID-19. After the Indian government locked down the country, banks tightened credit to mitigate the default risk. Unable to secure traditional loans, Indians used gold to secure financing. As Indians endured a second wave of lockdowns, many Indians resorted to selling gold outright to make ends meet.

********

Mike Maharrey is a journalist and market analyst for MoneyMetals.com with over a decade of experience in precious metals. He holds a BS in accounting from the University of Kentucky and a BA in journalism from the University of South Florida.


Nearly 40 percent of all gold ever mined was recovered from South African rocks.
Top 5 Best Gold IRA Companies

Gold Eagle twitter                Like Gold Eagle on Facebook