Investors should cap gold allocation at 10-15 per cent and consider staggered purchases through gold ETFs.
'It has always been viewed as a hedge against inflation.'
Owing to uncertainties on higher inflation and muted growth in the United States (US), coupled with concerns around America's rising debt and tariffs imposed by President Donald Trump, the world's largest economy has become the epicentre of an unabated record rally in prices of precious metals.
Returns from the yellow metal may be subdued, as focus returns to equities.
Gold, a safe-haven bet, is likely to continue its record-smashing journey in the New Year, rising to Rs 85,000 per 10 grams and even Rs 90,000 level in domestic markets if geopolitical tensions and global economic uncertainties continue.
Jewellers in India, the world's second largest gold consuming country after China, have started receiving more inquiries for purchase of gold or silver immediately after the Reserve Bank's announcement to withdraw Rs 2,000 notes from circulation. However, there is no panic buying of the precious metal unlike the situation witnessed in 2016 during demonetisation, jewellers body GJC said on Sunday. In fact in the last two days, the actual gold purchase has been less in exchange of Rs 2,000 notes due to strict Know your Customer (KYC) norms although sources said some jewellers have started charging a 5-10 per cent premium, taking the gold prices to Rs 66,000 per 10 grams level.
'It is the best avenue for investors who would like to take long-term exposure to gold.'
India's gold imports could pick up in the next few months after slumping 81 percent in June as falling prices spur buying, a government source said, adding to New Delhi's anxiety over a record-low rupee and a wide current account deficit.
The new Samvat 2080 is viewed as a year of hope for industrial and precious metals. A key reason is the expectation of US interest rates peaking, followed by a reduction in the coming months. Regarding crude oil, its trajectory depends more on how the situation unfolds in West Asia.
Gold, the safest haven amid the ongoing uncertainty, also emerged as one of the most lucrative investment options in financial year 2022-23 with an impressive return of 16.1 per cent in rupee terms, and 2.3 per cent returns in dollars. And, had it not been for the very high inflow of smuggled gold and the huge discount prevailing in the market due to high prices, the returns in gold would have been much higher, analysts said. The precious metal has consistently been delivering positive returns in India since 2016.
Gold prices are likely to decline further to around Rs 24,500 per 10 grams by December if the rupee continues to rule at the current level.
Irrespective of the global movement, gold prices in India are nearing the level of Rs 34,000 per 10 grams in the physical markets.
Analysts say investors should increase their exposure to gold up to 10% of their portfolio, depending on their comfort with a 2-year horizon. But avoid investing in physical gold or deposit schemes run by jewellers
Smuggled gold, which is selling sharply lower than the spot market price, is also responsible for discounts not ending. Some consumers are selling high amounts of gold.
Price up on weak dollar and strong demand
Bullion may settle with limited upside potential
Mandatory hallmarking of gold would be a positive in making the gold market more organised. Mandatory hallmarking would come into effect from January 15, 2020, with a one-year transition period for trade to sell existing inventories. Experts also expect more policy measures next year to bring in more transparency in terms of gold as an asset class.
This has steered a rally in global equities and dollar Index also ticked higher, trading near its four year high.
In 2013, the fall in international gold prices was 28 per cent.
A yellow glow is likely to stand out amid grey geopolitical clouds in 2023, with gold price projected to touch Rs 60,000 per 10 grams in the Indian market as more investors veer towards safe-haven assets. In a year where volatility was more a norm than an exception, gold prices in the international market oscillated from a peak of $2,070 per ounce in March to a low of $1,616 per ounce in November and is steadily recovering since then, according to market experts. At the beginning of 2022, gold prices were around $1,800 an ounce.
Euro-zone growth could improve because of (a) reduced pace of fiscal tightening and (b) stronger exports, but weak domestic demand and a fragile banking system could increase deflation risks that could force the European Central Bank to turn further accommodative.
Gold, which lost its sheen to some extent in the second half of 2021, is likely to regain the glitter in the New Year and cross the Rs 55,000-per-10-grams level amid pandemic woes, inflation worries and stronger US dollar. After a stellar run up in 2020 when the yellow metal touched a record high of Rs 56,200 on the MCX in August, the prices are near Rs 48,000 per 10 grams now. This is roughly 14 per cent lower from the all-time highs and 4 per cent lesser compared to January 2021 levels.
Some experts, however, see a silver lining in the fall and said the volatility has come down sharply and that bodes well for the Indian currency
Gold-silver ratio indicates more upsurge possible for the white metal.
Cascading effect of rising raw materials will result in inflation, high rates, slow capex
The rouble has been falling steadily since early November and collapsed earlier this month following a spectacular decline in the price of crude oil to five-year lows.
Dealers expect prices to fall further, owing to an impending rate hike in the US
Cashi Crisis: Day 9: Aaj ki Taaza Khabar!
