Stocks overshadow gold's glitter with strong Q1 rally
Whether the markets are able to decouple from bad news emanating out of Europe will be seen over the next week.
Gold has been glittering bright for investors for many years, but the stock market seems to have begun 2012 on a brighter note with better returns than the yellow metal in the first quarter of this year.
After outperforming the stock market for more than a decade, the appreciation in gold prices during the first three months of 2012 was lower than that of equities -- in India as well as the global markets.
An analysis of gold prices and stock market movements shows that the Indian stock market rose by about 15 per cent during the first quarter of this year -- as against a gain of just about three per cent in gold prices.
The silver has fared relatively better than gold with a gain of about nine per cent, but it still could not match the lustre of stock market rally during this period.
The stocks' out-performance over the bullion market in the first quarter of 2012 comes marks a major reversal of trends seen in the previous year.
While the stock market plunged by about 25 per cent in 2011, gold had turned out to be the best asset class with a 31-per cent surge. Despite its highly volatile moves, the silver prices had also ended the last year with a gain of about eight per cent.
The historical data shows that gold has given positive returns over the 12 out of last 15 years. Also, the gold prices have appreciated by an average of 20 per cent over the last 10 years, as against about 18 per cent for equities.
However, both the benchmark indices of Indian stock market, BSE's Senses and NSE's Nifty, have outperformed gold and silver in the first three months of 2012.
The Sensex gained 12.68 per cent between January and March, 2012, while Nifty rose by 14.7 per cent.
In comparison, gold prices rose by about three per cent and silver by about eight per cent between January-March 2012.
The gold prices in India rose from about Rs 27,600 per ten gram to near Rs 28,400 during this period, while silver rallied from about Rs 51,100 to Rs 56,200 per kg.
In global market also, the gold prices have risen by just about four per cent in the first three months of 2012, which is lower than most of the major global stock indices.
During this period, the Dow Jones Industrial Average (DJIA) has gained about 6.6 per cent, Nasdaq has rallied 16.7 per cent, Japan's Nikkei rose 17.7 per cent and Hong Kong's Hang Seng index has surged 8.9 per cent.
According to market experts, 2011 was very tough for the equity markets and the gains seen in the first three months of this year are mainly because of a pullback rally.