Prathamesh Mallya remains bullish on gold prices given the huge gush of liquidity and feels the possibility of Rs 56,000 per 10 gms mark looks very much likely for the yellow metal.
He believes Sovereign Gold Bonds by Government of India is one of the best possible options for gold investors on this Dhanteras day, along with coin or a jewellery options.
Mallya, who is AVP - Research of Non-Agri Commodities and Currencies at Angel Broking feels the pandemic has triggered recession across global economy and till the vaccine is out the safe haven demand will continue to stay.
Edited Excerpts:
Q: Dhanteras is on November 13. Why is Dhanteras important in terms of buying gold?
Indians desire to hold the yellow metal has been there since ages and it is for this reason, Dhanteras becomes an important occasion to buy gold and this trend will continue for generations to come, irrespective of the price of gold.
Q: What is your outlook on gold especially given the current environment? What are key triggers and risks for gold prices in Samvat 2077?
The pandemic has triggered recession across global economy and till the vaccine is out the safe haven demand will continue to stay.
Gold prices have given double digit returns in 2020 YTD, and the uncertain global markets, low interest rate regime in most of the economies, and easy liquidity are the push factors that will further boost gold prices in the months ahead.
The second wave of the virus in most of the European as well as US economy is a cause of concern for global markets which will slow down the growth trajectory further despite the easy liquidity push by central banks.
Any asset class cannot move higher or lower for perpetuity, and the downside economic risks posed by the Pandemic has led global investors to move towards safe heaven assets and gold perfectly fits the bill. In contrast, combination of potent forces of tightening of monetary policy by major central banks, successful vaccine and its supply globally, and uncertainty with regards to US-China trade which might ease now taking in to consideration the new president elect in the US are push factors for gold prices to head lower.
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However, all this factors are far away now and the fundamental push for gold prices is in the form of lower interest rates and unprecedented amount of liquidity by central banks which will keep gold prices elevated.
Q: How do you sum up Samvat 2076 for Gold?
Uncertainty has been the name of the game and it is due to this reason the safe haven demand for gold has seen a lot of rush from global investors. Samvat 2076 has been very good for the yellow metal and the shine will continue in Samvat 2077 also. Liquidity push the key agenda for the yellow metal prices to hit new highs.
Q: Will Gold prices hit a new high in Samvat 2077 or will remain rangebound? What is your strategy on Dhanteras day?
Unprecedented amount of liquidity push by central banks will ensure that the gold prices will remain elevated in the coming Samvat and possibility of Rs 56,000 per 10 gms mark looks very much likely for the yellow metal.
Q: Should one buy physical gold only or should one think of other options to have gold on Dhanteras day?
If it’s an occasion like marriage, religious functions and birthdays, physical gold is the best way one should think of. However, if it's for investment, Sovereign Gold Bonds by Government of India is one of the best possible options for gold investors.
Alternatively, if its case of buying gold on Dhanteras day, it can be a coin, or a jewellery, depending on the budget of the investor.
Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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