Gold Shines Brightest in FY25 with 41% Return, Beating All Asset Classes

Synopsis: Gold has outperformed every asset class in FY25 so far, delivering a stunning 41% return in USD terms. Strong central bank buying and investor demand have fueled this rally, as gold’s safe-haven appeal soars globally.

In a year defined by global economic uncertainty and shifting investment priorities, gold has surged to the top, emerging as the best-performing asset class in FY25. According to the National Stock Exchange's (NSE) April Market Pulse report, gold returned a whopping 41% in USD terms and 33% in INR terms—outshining equities, bonds, and other traditional investments.

A major factor driving this surge is unprecedented central bank buying. For the third consecutive year, global central banks purchased over 1,000 tonnes of gold, more than double the annual average seen between 2010 and 2021. Reflecting this trend, India’s Reserve Bank increased gold’s share in its foreign exchange reserves to 11.4% in 2024, up from 6.7% in 2014.

Global demand for gold reached a 15-year high of 4,974 tonnes, with investment demand alone rising 25%, indicating renewed confidence in gold as a hedge against inflation, market volatility, and geopolitical risks.

Despite gold’s stellar run in FY25, the report notes that Indian equity markets have outperformed over the long term. Over the last 20 years, the Nifty index delivered a 13% price return and 14.4% total return, compared to gold’s 10.5% return.

Meanwhile, investor activity in India remains strong. NSE’s total registered investor base hit 11.3 crore in March 2025, with 2.1 crore new investors added in FY25 alone — the highest increase in five years. States like Uttar Pradesh, Maharashtra, and Andhra Pradesh led the charge in new registrations.

On the trading front, the equity cash market turnover witnessed a spectacular rise from Rs 90 lakh crore in FY20 to Rs 281 lakh crore in FY25, registering a 26% compound annual growth rate (CAGR). The average daily turnover hit a record Rs 1.1 lakh crore.

While index options turnover saw a marginal dip, Nifty’s premium turnover surged by 37%, now making up nearly half the total index option premium market—a sign of growing sophistication among Indian investors.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Please consult a certified financial advisor before making investment decisions.