Gold has given almost 12 per cent CAGR return and in 2024, gold surged 18 per cent between February 14 and April 12, rising around Rs 20,000 and hitting new all-time highs of around Rs 74000/10 gm on escalating Middle East tensions, Chinese gold rush, record purchases by central banks, concerns over sticky inflation, soaring U.S. government debt, and continued fiat debasement. From the last 20 days, prices have corrected almost five per cent towards Rs 71,000 on profit booking, rising bets of delayed rate cuts, and de-escalating geopolitical tensions.
“Comparing gold returns over the last 15 years for Akshaya Tritiya, gold has delivered a 10 per cent compound annual growth rate (CAGR). There have been instances of some price correction, but the overall rise in prices has been consistent and steady,” says Naveen Mathur, director - commodities & currencies, Anand Rathi Shares and Stock Brokers.
However, buying gold on Akshaya Tritiya is considered auspicious since it is associated with good fortune, wealth, and achievement. “So definitely one should invest in gold on this Akshaya Tritiya as prices have stabilized after correction. Prices above Rs 70000/10 gm is the new normal now and expected to rise eight to ten per cent further from here in the next year,” says Prithviraj Kothari, Managing Director, RiddiSiddhi Bullions Limited (RSBL).
“Anecdotal feedback from jewelry retailers do indicate robust pre-bookings for the festival. We do anticipate purchases in the form of gold coins, bars, jewelry, and ticket purchases through digital gold buying platforms,” says Sachin Jain, Regional CEO, India, World Gold Council.
However, with the current economic crisis impacting purchasing power, fewer people might indulge in buying gold as a ritual instead, they might look at it as an investment tool or even as a buffer for difficult times. “Inflation concerns, currency depreciation fears, and the potential for continued political and financial instability globally are factors that continue to attract investors to gold,” says Mathur.
According to experts, investing during Akshay Tritya is essentially a religious practice and should not be mixed with investing in gold. Generally, when you invest in gold, people think in terms of providing a risk mitigator in the portfolio or hedging against inflation to try to generate an empty return or FD plus return. In India, people buy gold for religious or emotional reasons rather than purely from an investment perspective.
"Buying gold gives confidence regarding your overall wealth, which is protected. From an investment point of view, be it Akshay Tritya or before or after it, the reasons have to be completely different. The parameters based on which they invest have to be different, which is to be a part of an overall portfolio between five per cent to 10 per cent to provide diversification to the portfolio and limit the overall downside of holding, to hedge against inflation because for most of the years and for a long period of time, gold has been seen beating inflation and continues to hold the purchasing power of the rupee or currency," says Shashank Pal, Chief Business Officer, Prabhudas Lilladher Wealth Management
There are both positives and negatives for gold prices at this juncture, lower-than-expected economic data points, rise in growth concerns, higher rate cut expectations this year, geo-political tensions, concerns regarding rising debt, increase in demand, and fall in US Yields could act as tailwinds for prices.
Market participants always discount future events in advance, like an early rate cut by the Fed, hence any black swan event could further support the prices in the future. “Meanwhile, one big worry this year for gold is, no change in central banks stance over higher interest rates. Demand destruction in physical demand is also a concern with gold prices surging to record highs and domestic physical market trading at a discount over the last few months,” says Mathur.
However, while we may expect some volatility going ahead, one may wait for price dips before making a big investment. But that should not mean that one does not buy gold for the auspicious occasion of Akshaya Tritiya.
