The price of 10 grams of gold is off by nearly Rs 3000 or 4% from its lifetime highs and gold lovers now have an opportunity to buy the yellow metal on the auspicious occasion of Akshaya Tritiya which will be celebrated on May 10, Friday.
An investment now could earn between 7% and 19% by next Akshaya Tritiya according to experts’ estimates.
On MCX, the June gold futures were trading around 71000 per 10 grams on Wednesday down from the lifetime high of Rs 73,958.
“The recent correction is a good opportunity for investors who have a medium to long term term view on this bullion metal and one should look to invest in it in a staggered manner rather than in one shot,” Anuj Gupta, Head Commodity & Currency at HDFC Securities said. He suggests Rs 69,000-Rs 69,500 levels as favourable entry points as sees room for further upside with prices expected to hit Rs 80,000-Rs 85,000 by next Akshaya Tritiya.
Gold has delivered an impressive 16% returns since the last Akshaya Tritiya which fell on April 22, 2023. The price of 10 grams of gold has shot up by Rs 11,300 to over Rs 71,100 now from Rs 59,845 then.An analysis of gold price movement since 2014 shows a mixed performance of gold from one Akshaya Tritiya to the next. The price declined by 12% in the run-up to the next Akshaya Tritiya in 2015. In 2017, it was again a 3.23% decline. Meanwhile, Gold has given positive returns on 8 occasions between two consecutive Akshaya Tritiya with highest returns of 32% in 2020. In 2023 and this time the returns are again in double digits.
“If we look at the gold performance from the last Akshay Tritiya to this Akshaya Tritiya, gold has given an almost 18.5% return. If investors invested in gold every year over the last five years during Akshaya Tritiya, their CAGR return would be around 17.50%,” Gupta of HDFC Securities said.
The prospects of gold remain robust despite the recent rally as multiple levers are acting in consonance to support the price. This year’s strong rally has been primarily because of the geo-political tensions in the form of the Israel-Hamas war and Fed’s back and forth on the timing of interest rate cuts.
Gold witnessed strong traction in March-April as hopes of June rate cut gained ground with expectations of two more downward revisions of 25 bps, each in 2024.
Apart from this, the Chinese gold buying further triggered this bullion metal’s ascent to fresh lifetime highs on a regular basis, Prithviraj Kothari, Managing Director at RiddiSiddhi Bullions Limited (RSBL) said. Recent correction can be attributed to precious metal’s slipping into an overbought zone, Kothari said as he expects a further consolidation for next few days.”Those who missed the earlier rally can look around to buy more gold on dips this month,” he recommends.
As prices remain elevated, people are buying low-caratage light-weight gold jewellery, Kothari said, dismissing any dip in demand.
Gupta of HDFC Securities expects demand to pick-up given the expectations of further price hikes and wedding season ahead.
Sachin Kothari, Director at Augmont Gold For All spells out avenues that could be explored in this. “An investor can either buy gold in physical form through bars, coins and jewelry or in digital form through Gold ETF, Sovereign Gold Bond, Digital Gold, Futures, and Options. It depends on the time horizon and risk appetite,” he added.
He expects gold prices to appreciate at least 10% from here to Rs 76,000 by next year.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)