Although an easing interest rate environment appears to support prices of the yellow metal, double-digit returns like those in 2022 and 2023 are unlikely, especially at current levels, they said, advising investors to stagger their purchases.
“Whenever interest rates in the US fall, gold prices tend to rise again, and some of this year’s rise already reflects that,” said Nilesh Shah, managing director of Kotak Mutual Fund.
Gold prices have gained 12% in 2023 as tensions within the banking system and expectations of a change of course by the US central bank led to safe-haven buying at the start of the year.
In the meantime, a few sluggish months were then followed by renewed price momentum amid a slowdown in the US economy.
While falling interest rates diminish the attractiveness of asset classes competing with gold, continued high interest rates in the United States may worsen the country’s already growing debt levels.
“It is highly likely that the Fed will tighten policy too much or too little, keeping gold relevant from both a risk mitigation and yield enhancement perspective,” said Chirag Mehta and Ghazal Jain from Quantum AMC in their outlook for gold. , general elections scheduled for the first half of the year are expected to cause short-term stock volatility, which could also lead to gold buying, analysts said.
Gold prices touched an all-time high of over ₹64,000 per 10 grams in the domestic market earlier this year, before closing at ₹63,189 per 10 grams on the MCX. Silver, on the other hand, has been a relative underperformer, largely due to the fact that its industrial use has not attracted us as expected, in line with the Chinese economy.
“We see gold at ₹66,000-67,000, and for a rise of less than 5%, it is not lucrative to buy at current levels,” said Navneet Damani, head of commodities at Motilal Oswal Securities .
Investors may consider shifting some of their investments from gold to silver as the latter is likely to outperform this year, he said, expecting prices to rise up to ₹88,000 per kg.
However, for investment purposes, investors must purchase both gold and silver through instruments such as gold ETFs and bonds, especially since the premium to gold purchase of these two assets in physical form is very high, also if we take into account transaction costs. said Shah of Kotak Mutual Fund.
Although an easing interest rate environment appears to support prices of the yellow metal, double-digit returns like those in 2022 and 2023 are unlikely, especially at current levels, they said, advising investors to stagger their purchases.
“Whenever interest rates in the US fall, gold prices tend to rise again, and some of this year’s rise already reflects that,” said Nilesh Shah, managing director of Kotak Mutual Fund.
Gold prices have gained 12% in 2023 as tensions within the banking system and expectations of a change of course by the US central bank led to safe-haven buying at the start of the year.
In the meantime, a few sluggish months were then followed by renewed price momentum amid a slowdown in the US economy.
While falling interest rates diminish the attractiveness of asset classes competing with gold, continued high interest rates in the United States may worsen the country’s already growing debt levels.
“It is highly likely that the Fed will tighten policy too much or too little, keeping gold relevant from both a risk mitigation and yield enhancement perspective,” said Chirag Mehta and Ghazal Jain from Quantum AMC in their outlook for gold. , general elections scheduled for the first half of the year are expected to cause short-term stock volatility, which could also lead to gold buying, analysts said.
Gold prices touched an all-time high of over ₹64,000 per 10 grams in the domestic market earlier this year, before closing at ₹63,189 per 10 grams on the MCX. Silver, on the other hand, has been a relative underperformer, largely due to the fact that its industrial use has not attracted us as expected, in line with the Chinese economy.
“We see gold at ₹66,000-67,000, and for a rise of less than 5%, it is not lucrative to buy at current levels,” said Navneet Damani, head of commodities at Motilal Oswal Securities .
Investors may consider shifting some of their investments from gold to silver as the latter is likely to outperform this year, he said, expecting prices to rise up to ₹88,000 per kg.
However, for investment purposes, investors must purchase both gold and silver through instruments such as gold ETFs and bonds, especially since the premium to gold purchase of these two assets in physical form is very high, also if we take into account transaction costs. said Shah of Kotak Mutual Fund.