Gold rate up 8% in 2023 so far. Experts share the outlook for the yellow metal
₹54,656 per 10 gram on December 31, 2022, to ₹59,106 per 10 gram on July 13, 2023, rising about 8 per cent. Equity benchmark the Sensex, too, is up 8 per cent for the same period.
With an improving risk appetite of investors driven by the anticipated conclusion of rate hikes in the US and the continued resilience of both the US and Indian economies, a crucial question arises: what should be the investment strategy for gold for the remainder of the year? Rate hikes, the dollar's rise and the resilient US market have been the two major factors that have kept gold prices capped this year. On the other hand, inflation, economic uncertainty and geopolitical concerns support gold prices.
"After notching a three-year high of $2,085.4 per troy ounce on 4th May 2023 ($4 shy of an all-time high), gold prices have been on a steady decline since then. Ease in the US banking sector crisis and prospects of higher rates from Western central banks prompted such a move," said Ravindra V.
Rao, CMT, EPAT, VP-Head Commodity Research, Kotak Securities. Manav Modi, commodity and currency analyst at Motilal Oswal Financial Services observed that gold has given more than 10 per cent returns in the first four-five months of 2023 only on the back of various factors such as the expectation of slower global growth, change in interest rate hike cycle, geopolitical distress, banking concerns, etc.
However, the movement of the dollar index, yields, weaker demand and a few other uncertainties are influencing market participants to diversify their portfolios in riskier assets as well, Modi added. Experts believe that due to macro uncertainty and with central banks also increasing their gold reserves, it is important for market participants to diversify
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