Gold prices are down. How much time does it take to beat inflation?

gold jewellery 2


Gold prices hit their lowest levels in over two months this week. At the time of writing on Wednesday (11.50 am), the price of 24-carat gold across cities was around Rs 6093 per gram while the 22-carat gold was priced around Rs 5585/gram. Early this month, 24 Gold prices had hit an all-time high of Rs 61,490 per 10 grams. Gold prices are, however, expected to recover in months to come.

As yellow metal remains one of the favourite investment options among Indians, this article takes a look into how much time gold takes to beat inflation.

Any investment which fails to beat inflation is considered a bad investment. This applies to all asset classes, including Gold. Data, however, shows that the yellow metal has comfortably beaten inflation over the long term.

Check: Gold rates today

According to FundsIndia’s recent ‘Wealth Conversations Report’, gold has provided returns above inflation over the long term of 10-15 years. Those investing in gold for wealth creation can expect inflation+1-3% returns over the long term.

However, it is also important to note that gold often goes through an extended interim period of subdued returns. But the price the prices rise once it rebounds to the previous peak rate.

For instance, Gold had hit its peak in 1980 but it took another 10 years to hit a new peak again. Similarly, between 1996 and 2003, gold took 8 years to hit its 1996 peak once again. Between 2012 and 2019, the yellow metal took 7 years to hit its 2012 peak once again and rise further.

Also Read: By Next Akshaya Tritiya, Gold Price Seen at Rs 68,000 per 10 Gram!

Gold price change
Source: FundsIndia
Gold-US bond relation
Source: FundsIndia

Gold also shows an inverse correlation to US Real Yields. When the US Real Yields decline, Gold prices show a rising trend but the reverse happens when the yields increase. According to the report, gold prices are driven by US Real Yields and the USD-INR currency movement.


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