Year-ender 2023: Impressive 13% returns for gold. Is this its best show in 10 years?

Notwithstanding an impressive over 13% returns in 2023, year-to-date, yellow metal's gains are not its best in the last 10 years. The top returns were delivered by it amid the Covid virus break in 2020 at 28.23%, highlighting why it is the best hedge in uncertain times.

Commenting on yellow metal's performance, Palka Arora Chopra, Director, Master Capital Services said that gold failed to beat other asset classes this year, despite outperforming initially and hitting lifetime highs.

In 2023, equities furnished robust returns with Nifty's December surge taking gains to over 17% outclassing the bullion. Coming off age, more investors preferred to invest via systematic investment plans (SIP) to capitalise on the opportunities. Moreover, bouts of corrections on elevated bond yields and record dollar index (DXY) took the chips down during the year.


2023 Report Card
However, when it came to peer-to-peer comparison, MCX Gold has returned higher returns than Comex gold, Anuj Gupta, Head Commodity & Currency, HDFC Securities informed. On the YTD basis, the net gains by MCX gold is 13.55% while those by Comex are slightly lower at 11.70%. Yellow metal futures on MCX hit the lifetime high Rs 64,063 in 2023 while testing this year's low of Rs 54,771. This translates into Rs 9,200 price range that it has traversed.

In 2011, the returns by MCX gold were 31.84% while 29.61% in 2010.

As a caveat Gupta said that that percentage should not be taken on face value as 10-20 years ago the base price was relatively much smaller and hence the changes on the upside and downside would reflect higher levels.

For Comex gold, the 2023 extremes lie at $2,146.79 per troy ounce and $1,804.78 ounce, respectively.

While the MCX gold has given returns of 119% over the 10-year period, the latter has yielded 69%, Gupta said.



However, things are again looking-up for gold with DXY hovering near four month lows, according to analysts who see 10-11% gains in 2024. At least four analysts have told ETMarkets that MCX gold could end the next year at levels between Rs 67,0000 and Rs 68,000 per 10 grams.

Apart from HDFC Securities' Gupta and Chopra of Master Capital Services, Naveen Mathur of Anand Rathi and Narinder Wadhwa of Commodity Participants Association of India (CPAI) remain bullish on the prospects of bullion.

Mathur is Director - Commodities & Currencies at Anand Rathi Shares and Stock Brokers while Wadhwa is National President at CPAI.

“Against this backdrop of favorable fundamentals, we expect prices to post ascent towards the 68,000 mark in domestic bourses, while on the lower side, the demand zone residing between 56,000 and 57,000,” Chopra said.

A notable 13% return in gold during 2023 underscores its resilience as an investment, attracting investors seeking stability and a hedge against economic uncertainties, Wadhwa adds.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)