Bhoomika Singh
We Indians always shine like gold on an auspicious day like Akshaya Tritiya. The precious metal is a perfect choice on such days that in Indian tradition signify prosperity and wealth due to its invincible and everlasting features.
If someone bought gold last Akshaya Tritiya, which was an opportune time, gold has given returns of up to 15 per cent since then.
Though it is advisable to purchase gold in a strategic and staggered manner to average out purchase cost and diversify your portfolio with a 10-15 per cent allocation to gold at all times, the question facing us this Akshaya Tritiya is whether we should do a token purchase, or can we buy more on this auspicious day towards building our gold allocation?
This Akshaya Tritiya seems like an opportune time to load up your purchase as the macroeconomic backdrop and risk-reward dynamics seem to favour gold and the downside looks limited.
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Speaking on the auspicious occasion, Rohan Sharma, Managing Director, RK Jewellers South Extension-2 affirmed, “As you celebrate this joyous occasion, adorn yourself with the exquisite collection of jewellery from RK Jewellers, India’s most trusted and acclaimed jewellery brand. Our intricately crafted pieces, embellished with rare and precious gemstones, are a testament to our commitment to quality and craftsmanship.”
“And with our exciting offers and discounts, this Akshaya Tritiya is the perfect opportunity to indulge in luxury and elevate your style quotient. So come, explore our stunning collection, and add a touch of glamour to your festivities,” Sharma added.
Domestic gold prices are derived from international gold prices. International gold prices are priced in US dollars and hence, the dynamics of the US economy are big drivers of gold prices.
Expectations of a monetary policy pivot by the Federal Reserve are gathering steam after a regional banking crisis in the United States made the economic impact of higher interest rates apparent.
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“Mr Pawan Gupta, Director, PP Jewellers by Pawan Gupta, mentioned “Akshaya Tritiya is indeed one of the biggest festivals for the jewellery industry in India. It is believed to be an auspicious day for starting new ventures, buying gold, and investing in property. We are expecting good sales on this promising day. We believe Akshaya Tritiya sales should overcome the obstacle of price hikes. In India, gold has a strong economic connotation associated with auspicious festivals, and millions of people would customarily acquire gold on Akshaya Tritiya, at the very least making a token purchase. Keeping this in mind we are giving a 40 per cent discount on making charges on all Gold Jewellery.”
“The jewellery industry is evolving to meet the changing preferences and needs of customers, and there are several new buying trends emerging during occasions like Akshaya Tritiya. The gold retail industry has expanded beyond just gold purchases to include other categories such as diamond and polki jewellery, hence we are giving 40 discount on making charges of all Diamond jewellery as well,” added Gupta.
Likely, more damage to the financial system is yet to be revealed. Vulnerability in the financial system is expected to get further complicated if we see a recession in the United States.
The probability of a US recession in the next 12 months is high with Treasury yield curves in the US staying inverted for the 9th consecutive month. Policymakers have also cut US growth forecasts.
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Further deterioration in economic conditions could drive risk aversion, hurt risk assets and lead gold prices up.
The current background of a slowing US economy and financial instability limits the Fed’s ability to stay hawkish. The US Central Bank’s projections of its terminal rate are at 5-5.25 per cent, which is one 25 basis point rate hike away.
A pause in the Fed’s hiking cycle, which is likely in the foreseeable future, will be supportive of gold prices. An eventual cut in interest rates to support economic growth or calm financial market panic, the timing of which remains uncertain as of now, will be bullish for gold prices.
On the other hand, inflation in the US continues to stay stubbornly high, above the tolerable level for policymakers. This mix of higher inflation, slowing growth and limited headroom for monetary policy bode well for gold prices.
Gold can be a useful portfolio diversification tool amid the prevailing economic uncertainty and therefore deserves a meaningful portfolio allocation. One can use the recent consolidation in prices from all-time high levels to their advantage.
Financial options like Gold ETFs and Gold Savings Funds might be the proverbial “Sone pe Suhaga” while investing in gold this Akshaya Tritiya, enhancing your investment with advantages like purity, price efficiency, and liquidity.
Remember that these liquid alternatives that are backed by gold can improve quick and effective portfolio rebalancing. Gold is a good portfolio diversifier. Select wisely.
