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Gold price today rose on Wednesday, December 17, supported by firm global cues and growing expectations of further US Federal Reserve rate cuts after data showed a rise in US unemployment in November. On the MCX, February gold contracts gained 0.55% to trade at ₹1,35,150 per 10 grams, hovering just below the previous session’s record high of ₹1,35,346.

Analysts said the latest uptick aligns with gold’s long-standing role as a safe-haven asset during periods of economic uncertainty. “Gold continues to behave as a stabiliser whenever markets anticipate policy easing or face macro stress,” said an analyst tracking bullion markets.

A report by WhiteOak Capital underscores how gold has served as a powerful hedge against volatility and inflation for nearly four decades. The analysis shows that gold not only mitigated downside risks during years when domestic equities posted negative returns but also generated competitive long-term returns, making it a crucial component of multi-asset strategies.

An investment of ₹100 in gold in 1985 would have grown to ₹6,518 by March 2025, significantly outperforming bank deposits, which reached ₹2,100, and inflation-adjusted value of ₹1,478. Although the BSE Sensex rose even higher to ₹13,484 over the same period, equities achieved that with far higher volatility, whereas gold delivered steadier compounding and offered downside protection during turbulent market periods.

For example, ₹100 invested in the Sensex in 1995 becomes ₹2,374, in 2005 becomes ₹1,192, and in 2015 becomes ₹277, showing that equities also underperformed gold in certain starting periods. Bank deposits grew steadily but modestly: ₹100 grew to ₹859 (1995), ₹400 (2005) and ₹183 (2015), reflecting their low-risk, low-return profile. Inflation-adjusted values— ₹656 (1995), ₹355 (2005) and ₹161 (2015)—show that real wealth creation was limited without asset allocation.

Gold’s performance across decades further highlights its cyclical resilience. The metal delivered 11.0% CAGR in the decade beginning 1985, accelerated to 14.3% in the decade starting 2005, and maintained a strong 12.9% CAGR through the 2015 decade—demonstrating its persistent appeal across varying economic backdrops.

Rolling returns add another layer of evidence: gold’s average 10-year rolling CAGR of 10.2% since 1985 has consistently outpaced bank deposits (8.1%) and inflation (7.2%), confirming its long-term strength.

The financial year–wise index performance in the report confirms gold’s unique ability to act as a counter-cyclical asset. In several years when domestic equities delivered negative returns, gold posted sharp gains, providing meaningful downside protection and smoothing portfolio volatility.

From FY2011 to FYTD 2026, gold generated a 13.9% CAGR, making it the second-best performer among the tracked asset classes—behind only the S&P 500 TRI (INR). This track record demonstrates that gold has delivered not just safety but also competitive returns relative to riskier assets.

The BSE Sensex delivered strong gains in years like FY2014 and FY2015, but also saw steep declines, including –9.2% in FY2012, –18.5% in FY2017 and –22.9% in FY2020. In contrast, MCX Gold acted as a consistent hedge, generating positive returns during several equity downturns, such as 32.9% in FY2012 and 29.7% in FY2020. The S&P 500 TRI (INR) outperformed all major asset classes on a CAGR basis, delivering 19.2% from FY2011 to FYTD 2026, while gold recorded a solid 13.9% CAGR. Short-term bonds remained stable with 7.7% CAGR.

Reiterating the compounding impact, the report again highlights that ₹100 invested in gold in 1985 would now be worth ₹6,518, far surpassing inflation-adjusted holdings and significantly narrowing the gap with equities over time despite far lower drawdowns. These comparisons highlight gold’s dual role as both a growth and risk-mitigating investment.

On the technical front, analysts expect gold to trade within a defined range over the near term. “Gold is expected to trade in the range of $4,300 (~ ₹133,000) on dips around support to book profits near resistance,” said Renisha Chainani, Head – Research at Augmont. She added that sustained global uncertainty and anticipated policy action from the US Federal Reserve may continue to support bullion prices.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.

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