Are you going to buy gold in this Akshaya Tritiya? The auspicious day, Akshaya Tritiya or Akha Teej of this year is in May. According to Hindu culture, People consider this is the best day to buy gold as it symbolizes wealth and prosperity. Presently, the country is in the midst of the covid-19 crisis and the ill effects of the monsoon. The aforesaid reasons have created fluctuations in the sales of physical gold. However, Gold is an all-time favorite of Indian investors and hence market witnessed the growth of digital gold or online sale of gold. The gold investment options available today are easy to avail within the home and there is a strong preference for digital gold from investors in this covid hit Akshaya Tritiya.
Trends in Gold
Gold is considered as best investment option to diversify the portfolio and guard against uncertainty. The gold yielded a return of 28% (in rupee) 2020 and 24% in the year 2019. Due to the sudden shift in the yield of the dollar and US bonds, the gold prices have been in a state of stress. Global investors preferred US bonds, bought large quantities of dollars which in turn put the yellow metal under pressure. The government decreased import duties to 10.75% to increase the demand at the retail level and to prevent smuggling. The March end in the current year marked the import of India’s gold to 321 tonnes while compared to 124 tonnes in the first quarter ended last year.
Expert views: Should you buy yellow metal today?
According to Chirag Mehta (senior fund manager, Alternative Investments, Quantum AMC), as the world is pumping more money into the economy to fight against covid-19 aftereffects, this will result in to increase in inflation and gold. He said that since the rupee is depreciating and foreign investors are cutting down their investments, it is good to invest in gold to diversify the currency-denominated asset to gain value in the long run.
In the opinion of Hitesh Jain (lead analyst, Institutional Equities, YES Securities), the increasing trend in inflation will increase the demand for gold in the next few months.
Motilal Oswal Financial Services in a commodity report suggests that to buy gold for the short to medium term to reach $2,050 to $2,200.
Options to buy gold
Sovereign Gold Bonds are with a tenure of 8 years which will provide annual interest and is includes tax incentive. It has low liquidity in the secondary market and provides an option to exit in the 5th year. Gold ETFs are backed by 24 k physical gold with its prevailing market price and are taken care of by asset management companies. ETFs can be sold at any time. Digital gold scores ensure purity and liquidity but have price inefficiencies due to an increase in premiums and bid-ask spreads.
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