Gold prices surged to their lifetime highs amid a higher probability of the US Federal Reserve starting to cut interest rates from June, while geopolitical concerns supported the gains.
On the MCX, the April futures of gold jumped more than ₹800 per 10 grams to cross the ₹65,000 mark on Tuesday. Prices were higher for the fourth consecutive session.
While gold remains important to protect the overall portfolio from any adverse movement in equities and fixed income, investors should refrain from buying at current levels, and instead look at adding gold in dips, experts said.
Agencies“There is a certain premium that gold currently has because of geopolitical issues, but this is unlikely to last long because tensions will ease eventually,” said Ravindra Rao, head of commodities at Kotak Securities. “The strength on expectation of lower interest rates, though, will stay.”
Gold prices have an inverse correlation with interest rates and typically move higher with easing rates due to their relatively higher attractiveness as compared to fixed-income investments.
The expectation of the US Fed pivoting, coupled with strong buying from central banks helped gold prices gain more than 12% in 2023, even after it had outperformed most asset classes in 2022. In 2024, gold prices are up around 2% as compared to a 2-3% gain in the benchmarks Nifty 50 and Sensex.