Although the price of 10 grams of gold is approximately Rs 3000 or 4% below its all-time highs, gold enthusiasts have the opportunity to purchase the precious metal on the auspicious occasion of Akshaya Tritiya, say experts.
A study of gold price trends since 2014 reveals a varied performance of gold between one Akshaya Tritiya and the next. In 2015, the price decreased by 12% leading up to the following Akshaya Tritiya. Similarly, in 2017, there was a 3.23% decline.
However, gold has yielded positive returns on eight occasions between two consecutive Akshaya Tritiya, with the highest returns of 32% in 2020. In 2023, the returns have once again reached double digits, making it an attractive time for investors to consider adding gold to their portfolios.
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So where are gold prices headed and what should investors do? Here’s what experts have to say
Gold Prices: Trend So far
Navneet Damani, Group Senior Vice President, Commodity and Currency Research, MOFS notes that just like last year, gold and silver has seen northward movement in Q1 2024 as well, matching or even outperforming other major asset classes. “As we enter the new FY, which starts with the auspicious occasion of Akshaya Tritiya, gold and silver have marked gains of 13% and 11% year-to-date, respectively. Two main factors are triggering volatility in the bullion market – geo-political tensions and US Federal Reserve monetary policy,” he tells TOI.
Naveen Mathur, Director – Commodities & Currencies, Anand Rathi Shares and Stock Brokers says that gold prices are up almost 17–18 % since the last festival date. “Prices have continued to depict a strong trend in the first quarter of the year; a 3% increase in demand worldwide and an 8% increase in demand in India were noted as per estimates by the World Gold Council,” he tells TOI.
Gold Prices: What’s the outlook?
According to Anand Rathi’s Mathur, gold prices have been rising due to the fact that investors have remained optimistic focusing on the long term value of their investments. “Although we may not expect new record highs in the near term, gold prices are still expected to remain steady this festival season. Jewellery demand may get impacted in rural India, while investment demand still remains firm leading to prices to consolidate in the range of Rs 69,800 – 72,900 in futures contract in MCX,” he said.
Navneet Damani says comparing gold returns over the last 15 years for Akshaya Tritiya, gold has delivered a 10% CAGR. “There are both positives and negatives for gold prices at this juncture, lower than expected economic data points, rise in growth concerns, higher rate cut expectations in this year, geo-political tensions, concerns regarding rising debt, increase in demand and fall in US Yields could act as tailwinds for prices. Market participants always discount future events in advance, like an early rate cut by the US Fed, hence any black swan event could further support the prices in future,” he tells TOI.
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“There are several platforms for market participants to invest in gold based on their risk profile. From a longer term horizon, it is advised to invest in Sovereign Gold Bonds which will help to capitalise the price rise in gold and an additional 2.5% p.a. interest to investors. Several other modes to invest could be in the form of ETF, exchange traded derivatives, Digital Gold and Physical bars and coins,” Damani said.
“We continue to maintain a positive stance for Gold recommending buying on dips, with a target of Rs 75,000 for gold on domestic front and $2450 on Comex,” he adds.
Anuj Gupta, Head Commodity & Currency at HDFC Securities told ET, “The recent correction is a good opportunity for investors who have a medium to long term term view on this bullion metal and one should look to invest in it in a staggered manner rather than in one shot”. He suggests Rs 69,000-Rs 69,500 levels as favourable entry points as sees room for further upside with prices expected to hit Rs 80,000-Rs 85,000 by next Akshaya Tritiya.