Equity vs Gold: Which Asset Is a Better Hedge During Uncertainty?
Gold is often referred to as a safe-haven asset because it tends to maintain its value during times of economic uncertainty and market fluctuations. When stock prices drop or inflation starts to climb, many investors look to gold as a reliable way to safeguard their wealth and shield themselves from financial risks. Its finite supply […] The post Equity vs Gold: Which Asset Is a Better Hedge During Uncertainty? appeared first on Trade Brains.
Gold is often referred to as a safe-haven asset because it tends to maintain its value during times of economic uncertainty and market fluctuations. When stock prices drop or inflation starts to climb, many investors look to gold as a reliable way to safeguard their wealth and shield themselves from financial risks.
Its finite supply and worldwide acceptance make it a trustworthy option, and historically, gold has shown strong performance during market downturns and economic slowdowns.
Gold vs. Equity in 2025
Over the last year, gold has really outshone the Nifty 50 index, proving itself as a solid safe-haven asset amid market turbulence. While the Nifty 50 took a hit, dropping about 2.20% due to concerns over the economy and market volatility, Gold (Futures) actually climbed by 41.6%.
This impressive performance highlights how investors have turned to gold as a safeguard against inflation, global economic uncertainties, and currency swings, making it a more dependable store of value compared to stocks during this challenging time.
Gold has long been recognized as a reliable safe-haven asset, especially when the stock market takes a hit. It has notably outperformed the NIFTY 50 during times of correction.
For example, while the NIFTY 50 faced steep declines, plummeting 52% in 2008, 25% in 2011, and around 15-16% in 2000-2001, gold managed to shine through with positive returns of 30%, 31%, and between 1-6% during those same years.
| Year | Crisis | NIFTY 50 Returns | Gold Returns |
|---|---|---|---|
| 2000-01 | Dot-Com Bubble | -16% | 6% |
| 2008 | Global Financial Crisis | -52% | 30% |
| 2011 | Eurozone debt turmoil | -25% | 31% |
| 2020 | COVID-19 crash | -36% | 4% |
Experts’ and Analysts’ Comments
Goldman Sachs has made a bold move by raising its gold price forecast for the end of 2025 to $3,700 per ounce. This marks the third time this year they’ve adjusted their predictions, thanks to a surge in central bank purchases and increasing investor interest amid fears of a recession.
In a more drastic “extreme risk” scenario, fueled by rising U.S.–China trade tensions and a potential economic downturn, the bank suggests that gold could skyrocket to $4,500 per ounce by the end of 2025.
JP Morgan is forecasting that gold could soar to $3,675 per ounce by the fourth quarter of 2025, and might even surpass $4,000 per ounce by mid-2026. This surge is expected to be fueled by growing fears of a recession, increasing U.S. tariffs, and ongoing trade tensions between the U.S. and China. However, if central bank buying slows down or if the U.S. economy proves to be more resilient than expected, leading to tighter Federal Reserve policies, gold might encounter some challenges.
So Which One Wins as a Hedge?
- For Stability: Gold continues to be the go-to option when markets are shaky and inflation is on the rise. It provides a dependable way to preserve your capital, especially when traditional investments start to struggle.
- For Growth: Investing in equities is a great choice for those who have a longer time frame and can handle the ups and downs that come with it. Historically, stocks have shown to provide better returns over the long haul.
- For Diversification: To really safeguard against market volatility, it’s wise to have a balanced portfolio that includes a mix of different assets.
In 2025, gold seems to be the go-to option for a short-term hedge, thanks to its proven track record during crisis and some pretty positive forecasts from analysts. On the flip side, when it comes to building wealth over the long haul, equities still beat it. For investors trying to find their way through uncertain times, the best approach isn’t to pick one over the other, but rather to blend both into a well-rounded portfolio.
Written by Satyajeet Mukherjee
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
The post Equity vs Gold: Which Asset Is a Better Hedge During Uncertainty? appeared first on Trade Brains.
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