Gold has had a phenomenal run since the last Dhanteras which was celebrated on November 10, 2023. Notwithstanding this it can still earn returns of 10-12% till the next one.
“We expect that investing in gold will reap benefits in the future and it will provide attractive returns notwithstanding the rally in the past one year. Geopolitical and economic uncertainties, significant global ETF inflows, dovish monetary policy by western central bankers, the US election, and a lower dollar index continue will support the bullish trend in gold,” Anuj Gupta, Head Commodity & Currency at HDFC Securities said.
Gupta recommends a ‘Buy’ on gold around Rs 75,500–76,000 with further accumulation on dips in the range of Rs 73,500–73,700 range for the price target of Rs 85,300–87,000 till next Dhanteras. He places the stop loss at Rs 71,500.
Ventura Securities sees an upside to Rs 85,700 per 10 gram in gold with a support at Rs 77,000. As for silver, prices may hit levels of Rs 1,06,000 to Rs 1,20,000. It has support at Rs 95,500.
While the long term prospects of gold remain intact, investors with a short-term view should remain wary as experts see prices to subside after a sharp uptick in the prices. While, gold’s festive appeal along with the wedding season ahead could lead to a surge in demand for physical gold irrespective of where the prices are, expert Amit Goel, Co-founder and Chief Global Strategist at Pace 360 said as he expects gold prices to subside over the next few months before resuming their long term bull run, as it is extremely overheated as an asset class. He sees no material impact of Diwali with regards to the movement in domestic yellow metal prices.
What works for gold?
Expert Prathamesh Mallya, DVP- Research, Non-Agri Commodities and Currencies at Angel One calls gold a “portfolio diversifier for investors, going on to say that it could be a substitute for equities in the near to medium term for less risk appetite investors. Geo-political problems and US elections are strong triggers to keep gold’s haven appeal up, he added.
Guide to buying gold
1) Physical Gold — jewellery, bars and coins
While the demand for gold jewellery during Dhanteras and Diwali 2024 would be under pressure amid record high prices, yet jewellers expect demand to persist particularly due to the ongoing wedding season and the cultural significance of gold during these festivals, Prithviraj Kothari, Managing Director of RiddiSiddhi Bullions Limited (RSBL) said.
Consumers could gravitate towards lightweight jewellery and coins though the volume-based demand may struggle, Kothari said.
2) Gold ETFs: Gold ETF folios in India have grown 7.5X in the past four years and investors are now increasingly inclined to invest in gold via the mutual fund route, says Vishal Jain, CEO of Zerodha Fund House.
“Having been part of the journey of ETFs in India since the beginning, this shift doesn’t surprise me. Gold ETFs combine the advantages of owning gold—with high purity, securely stored, and fully insured—while offering the flexibility and cost-efficiency of ETFs. It essentially gives investors a simple way to own gold without the hassle of physical storage. Furthermore, the ETF format offers an advantage with respect to taxation, if compared to physical gold,” Jain said.
Ventura also recommends buying ETFs or gold mutual funds as they present a better option due to their higher liquidity.
3) Gold SIPs
Gold SIPs or systematic investment plan is available for digital gold and can also be availed from jewellers. This means you can regularly invest a fixed amount and later get a gold of the value that has been deposited.
4) Digital gold
Gold can be purchased digitally from online platforms like PhonePe, Paytm. Buyers can own gold with the need to possess it. The gold is kept safely with these platforms and delivered when there is a need.
Big jewellery brands like Tanishk Jos Alukkas and many others also offer facilities for buying digital gold.
5) Gold futures
Gold can also be bought through the MCX and NSE in the form of contracts. The prices here are dynamic and traders can capitalise on the movements in gold by buying futures and options.
6) Why a no to Sovereign Gold Bonds (SGB)?
Almost all Sovereign Gold Bonds (SGBs) are trading at a premium as current market prices also factor in the additional 2.5% returns guaranteed by SGBs, Ventura Securities said. It also highlighted that some of the bonds reviewed by it are experiencing lower liquidity, which could pose a challenge when buying or selling.
Also read: Gold’s 30% returns since last Dhanteras outperform most asset classes. What lies in Samvat 2081?
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)