Gold prices may continue to remain elevated considering global macros and geopolitical factors, says Tapan Patel

livemint.com:

LiveMint, Patel said that gold has a very low correlation with other asset classes hence it is advisable to allocate some of it to your portfolio. The current market environment is quite challenging as investors look to hedge or diversify their portfolios with safer assets. Investors may opt for an asset class that can protect their portfolio from market uncertainty.

Gold is a proven asset class that has protected its value in a time of distressed economy and uncertain market conditions. Gold has a very low correlation with other asset classes hence it is advisable to allocate some portion of the portfolio amidst geopolitical chaos and inflationary scenarios. Investment allocation completely depends on an investor’s financial goals, age, risk appetite, and return expectations among other factors.

Investors should go for asset allocation as per economic cycles and market environment. Investors should give higher weightage to equity during times of economic boom and growth period while a balanced approach is advisable with an increase in allocation to bullion and debt during the economic downturn. Yes, investors are now opting for the non-physical holding of gold and silver to avoid storage costs and other risks.

The market has seen steady growth and inflows in the gold and silver ETFs with increased market volatility and geopolitical uncertainty. Investors have grown interested in ETFs to own the assets in the existing portfolio either in demat form or mutual fund account with ease of dynamic asset allocation on the same platform. Young and new investors have found it a more cost-saving, liquid, and easy way of investing.