Gold's is shining bright as Akshaya Tritiya, an auspicious day for purchasing the yellow metal, approaches on April 30, with the spot rate crossing the psychologically significant mark of Rs 1 lakh per ten gram, trading above $3500 mark in the international markets.
The precious metal's rate as per the India Bullion and Jewellers Association (IBJA), which is used as a reference rate for pricing gold exchange-traded funds (ETFs) and gold funds, was hovering around Rs 99,100 in early trade on April 22.
Uncertainty around the ongoing tariff war and volatility in the US dollar have prompted more investors chasing gold, enhancing its status as a safe-haven asset. The yellow metal’s glittering run has also been aided by accumulation of gold reserves by central banks across the globe, inflation concerns, and a rising demand after the pandemic.
"We are currently witnessing, sky rocketing gold prices - ‘gold’s era’. This year marks a significant period for gold, with global prices increasing by 25 percent since January and reaching a record high of US$ 3500 per ounce. In India, gold prices have hit historic highs of Rs 1 lakh per 10 grams, reinforcing the belief in the yellow metal. Gold’s status as a safe haven is at an all-time high, and it is anticipated that Indians will continue to purchase gold this Akshaya Tritiya regardless of price fluctuations," said Sachin Jain, Regional CEO - India, World Gold Council.
Despite high prices, Jain expects robust seasonal and wedding-related demand in the days ahead, regardless of price fluctuations.
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Gold May Shine Brighter
Goldman Sachs has already raised its 2025-end gold forecast to $3,700 per ounce from $3,300, with a projected range of $3,650-3,950, citing stronger-than-expected demand from central banks and higher exchange-traded fund inflows due to recession risks. "Eventually, we see gold going beyond Rs 1.06 lakh (in the domestic market) by the end of year," says Navneet Damani, Head of Research – Commodities, Motilal Oswal Financial Services.
The factors behind gold’s glitter have not eased, implying the outlook for its demand continue to be bright.
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Time to Tread with Caution
Gold's breakneck rally signals the need to handle investments in this asset class with care. "Gold has seen a rally of 30 percent in the last four months. We are advising caution to retail investors who have not yet participated. At this level, it is more of exuberance and retail investors should stay away. Traders can continue riding the rally," said Navneet Damani.
Irrespective of price movements, the focus should be more on asset allocation. “Our views do not change on the basis of price movements. Gold is important from the asset allocation perspective – it can be around 10 percent of your overall portfolio,” says Harshad Chetanwala, Co-founder, MyWealthGrowth, an investment advisory firm.
If your allocation is lower than 10-15 percent, you can look at adding gold to your portfolio. “Gold is at an all-time high due to the tariff wars and other uncertainties. Some may settle over time. If you want to build allocation in gold can use such opportunities to do so in a gradual manner instead of investing in it immediately. Look at it not from purely returns perspective, but as a portfolio diversifier,” Chetanwala added.
On the other hand, if exposure to gold has exceeded your planned allocation, there could be a case to rebalance. “If the proportion has increased due to falling equities and rise in gold prices, then you can look at rebalancing. There are plenty of uncertainties still, so there is room to rebalance, though not for outright selling,” said Chirag Mehta, Chief Investment Officer, Quantum Mutual Fund.
“If your allocation is lower, however, you can look to increase your exposure to 10-15 percent of your portfolio over a period of 6-12 months. Track volatility and increase your gold allocation by buying on dips,” Mehta added.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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