Gold, silver behave differently amid West Asia conflict; Arun Kejriwal explains why

Market veteran Arun Kejriwal on Wednesday noted that gold and silver prices have behaved differently amid the ongoing West Asia conflict. Typically, precious metals tend to surge during periods of geopolitical tension, but the recent trend has surprised many investors.

"This time, the prices were actually moving downwards. It's something which has not happened in a very long time. So, it has baffled a lot of investors," he told Business Today.

"It appears that when there is a challenge of a different kind emerging, where it is one against the rest of the world, gold and silver don't behave in the same normal manner," the expert added.

Kejriwal also pointed to a potential shift in global investment preferences. "There's also a growing view among some countries that they do not want to invest their money in US treasury bills (T-Bills), leading to a shift towards alternatives. At the same time, some believe the run-up in gold has been a little too sharp to be entirely comfortable."

He also referred to the recent gold sales by select countries. "You also had a couple of countries, including Russia, selling some amount of gold in the previous few months. However, if you are looking at a 12–24 month investment horizon, I would believe you could allocate around Rs 10 out of every Rs 100 you plan to invest to gold and silver combined," Kejriwal said.

According to him, investors should maintain a longer investment horizon to benefit from precious metals.

"Your horizon should be 24 months or longer. And the kind of returns you should expect should be one and a half times what you expect from equity," he concluded.