Gold has been one of the top-performing asset classes in terms of returns over the past year. The returns from the yellow metal from the last Akshaya Tritiya (May 3, 2022) are around 20% and is likely to maintain momentum for the next 12 months. Investors can consider buying gold and related instruments not just for gains but also to hedge against potential losses on this Akshaya Tritiya on Saturday, April 22, 2023.
Buying gold on Akshaya Tritiya is considered auspicious, and the day turns out to be a big occasion for buying this bullion metal in various regions of India,
Deveya Gaglani, Research Analyst – Commodities at Axis Securities, told ET Markets. “In Indian culture, gold is perceived as a symbol of pride and is believed to bring prosperity and good fortune,” he added.
“Indians prefer buying gold on Akshaya Tritiya’s auspicious occasion. It is considered a long-term investment, although the prices lately have been hitting the roof, but investors should still consider accumulating it,” Mahendra Luniya, Chairperson of Vighnaharta Gold, said.
Saumil Gandhi, Senior Analyst-Commodities at HDFC Securities, sees a further upside in gold despite gains made over the past year. He believes gold to continue its outperformance over other asset classes under the current circumstances.
Gandhi recommends buying in gold this Akshaya Tritiya, calling it “a highly valuable and safe haven asset”. If we look at the performance of yellow metal over the last five years during Akshay Tritiya, the average returns are around 13%, the HDFC Securities expert said.
Gold has gained on the back of economic slowdown and geopolitical issues, including the Russia-Ukraine war, the recent banking crisis in the US, and lingering high inflation.“The geopolitical tensions have not been resolved completely, whereas there are possibilities of new tensions in Taiwan. These geopolitical situations with increasing inflation keep the uncertainties high, and that is reflected in the asset price. This situation does not seem to be coming to an end and hence will keep boosting the prices further up,” Luniya said.
However, Gaglani was not too optimistic about the buying traction this time, considering the price appreciation seen in gold and silver. “We anticipate that the sales of gold jewellery during this year’s Akshaya Tritiya on April 22 may remain subdued due to gold prices rallying over 12% YTD. This price surge may prompt investors to postpone their purchases,” he clarified.
“Considering the high prices of gold at present, it may prove to be an expensive investment,” Gaglani of Axis Securities said. His advice to investors is to purchase gold in a staggered manner gradually to spread out the cost and mitigate the risk of buying at a peak.
People must be mindful of purity, while investing in coins or bars or any other form of physical gold, Luniya said.
The charges involved in physical gold substantially reduce the net returns of the investors, he added.
Options for investment
There are multiple avenues for gold investment in India, with physical gold being the traditional method, Gaglani said. However, investing in physical gold has certain limitations, including making and storage charges, he added.
One can overcome these hurdles by opting for digital routes such as Digital Gold, Gold ETFs, Gold Mutual Funds, and Sovereign Gold Bonds, the HDFC Securities expert said.
Investors willing to buy in a staggered manner could buy Sovereign Gold Bonds (SGB) from the Reserve Bank of India (RBI). It offers an interest rate of 2.50%, and the returns are pegged to the price of gold and guaranteed by the GOI, Gaglani said while warning against liquidity issues in this instrument.
Luniya also recommends SGB as an option for gold investment.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)