Planning to buy gold in physical form this Akshaya Tritiya? This is what you must do
“Gold purchases are an inseparable part of Akshaya Tritiya celebrations for millions of Indians as a sign of prosperity, and it signals the start of seasonal buying. Though a major gold buying festival, this year Akshaya Tritiya faces life-time high prices of gold and a lukewarm response from consumers over the last few weeks,” Somasundaram PR, Regional CEO, India, World Gold Council said on his expectations from Akshaya Tritiya , this time around.
“However, given the strong cultural connect, any short-term softening of price could mean a Akshaya Tritiya surprise for jewelery request,” he added.
“Purchasing actual gold, such as coins, bars, and jewelry, is still the most common way to invest in gold,” Rajesh Shet, Chief Executive Officer & Co-founder SahiBandhu told ET Markets.
“Indian Gold coin minted by the Security Printing and Minting Corporation of India Limited (SPMCIL), an initiative by the government of India, is available in 5, 10, and 20 grams. It is of 24 karat purity and 999 fineness. The coin is reportedly 2-3% less expensive than those produced by most reputable corporate dealers,” Shet said.
Investment in gold is an insurance against uncertainties and is an important component of asset allocation and diversification. Typically, a 10-15% allocation to gold is considered good. One can also hedge it against inflation and periods of inflation.
Gold has given inflation beating returns over the past 5-6 decades. A report called ‘smallcase’ published by Windmill Capital suggests that the absolute returns in gold have doubled over a decade while the compounder returns have been around 7.5% during this period, in the Indian context. “Despite the rocketing prices, Akshaya Tritiya is a happy occasion, and in my opinion, people should buy gold not just for its financial aspect but for the emotional value it holds. Given the recent increase in gold prices, investing in gold can give portfolio stability and diversification, particularly during periods of market turbulence,” he adds.
Gold continues to remain as an attractive investment option for all categories of investors who’s looking to hedge against market uncertainty and inflation, said Rahul Kalantri, Vice President – Commodities at Mehta Equities.
The outlook for gold will depend upon the stance of the US Federal Reserve. Any rate hike could lower the appeal of the yellow metal. The strong economic data emerging in the US has dashed hope of any rate pause and there is a clamour that there could be a 50bps rate hike by Fed’s June monetary policy. There is one Federal Open Market Committee (FOMC) meeting in the first week of May where the US Central Bank is expected to raise 25bps.
“The current global economic environment, central bank demand, de-dollarization, rising investment in gold, and the Federal Reserve’s liquidity injection into the market all contribute to the bullish outlook for gold, which can drive gold higher towards Rs 64,740 & 66,000 levels in FY2023. But the next rally might start above Rs 62,000 per 10 gram or $2075 per troy ounce. Hence investors/traders should wait and watch the prices and grab the opportunity,” Kalantri said.
“Technically, gold is faring near its all-time high of $2075, with the April high clocked $ 2049. It might face stiff resistance around the $ 2050-2075 range, but when it breaks this range, it may register a new ATH before July 2024. If the current sentiment continues, $2100 seems achievable by September this year,” Mohd Abutarab A. Shaikh, Market Analyst, Vantage said.
It could be hastened due to rising geopolitical conditions and gold will not disappoint accumulators in the coming five years, Shaikh said.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)