In FY23, gold prices increased 15%, and they may reach $66,000–$68,000 levels in FY24. Are investments a good idea?
In the fiscal year FY23, gold prices saw a double-digit rise, making it one of the finest choices to provide solid returns in the face of high equity market volatility. In contrast to the general flat to negative returns that Nifty and Sensex have provided in FY23, gold has increased by a staggering 15% due to macroeconomic uncertainties. The bullion market appears profitable for the fiscal year FY24, and in a bull case scenario, it may gain another 15% to 20%. What therefore is the subsequent gold level for FY24?
This week, on March 31, MCX gold futures expiring on June 5 saw a minor decline of 295 or 0.49% to 59,600 per 10 grams, marking the conclusion of the fiscal year FY23. Yet, the futures had increased to a maximum of $60,065.
The price of international spot gold, which was down 0.6% on Friday to close to $1,968 per ounce, was followed by MCX gold futures. Yet, as wagers on a slowdown in the US Federal Reserve’s rate hiking schedule increased, investors are expected to be tempted to metal while being cautious with the dollar.
Jateen Trivedi, VP Research analyst at LKP Securities, claims that gold prices have increased dramatically in domestic markets in the last fiscal year (FY) 23, jumping 8000 rupees from 52000 to 60000, outperforming all other asset classes by 15%. As the economy was already struggling to absorb the money injection from the US during the pandemic that gave inflation the boost in the Quantitative Easing era, Nifty has offered flat to negative returns in the current FY23. This is due to the geopolitical tension in Russia and Ukraine escalating.
Gold has been demonstrated to be a fantastic hedge in the portfolio, giving forth significant returns, he claimed.
The future is favorable for gold in FY24.
According to Trivedi, “moving forward, Gold still seems attractive in terms of ROI from a safety standpoint, where the global inflation rate is still high and the interest cycle has not yet eased, will also offer the push needed for Gold to run and deliver 10-15% return in approaching FY24.”
According to an LKP Securities analyst, gold prices might easily hit 66000–68000 on base case performance even before the FY24 comes to a conclusion in 2019.
Due to the weak and erratic performance of hazardous assets, the brokerage’s analyst highly suggested holding onto gold investments for additional returns of 10-15% in the base case and 15-20% in the bull case.
Rahul Joseph, the company’s founder, and director stated in a similar manner, “Gold prices in India have been increasing over the past several years and may be linked to numerous causes like the global economy, currency fluctuations, and changes in both supply and demand for gold.
Joseph also noted, “Because of its cultural and religious significance, particularly during festivals and weddings, demand for gold has continued to be high in India. In India, it has essentially been a typical investment choice. It serves as a hedge against inflation and currency depreciation for the majority of people. The trend of growing gold prices in India is anticipated to continue in the foreseeable future, notwithstanding minor variations.”
