Will gold prices touch Rs 70,000 by next Akshay Tritiya?

Gold is often considered a safe haven asset that can help diversify a portfolio and balance overall risk-reward. However, like any other investment, the performance of gold can vary depending on market conditions and other factors.

Consider this: in 2022, the return on gold was not favourable for investors in dollar terms, despite the global uncertainty. This may have been due to several factors, such as the strength of the US dollar, low inflation expectations, and the performance of other assets, such as equities.

However, in 2023 YTD, gold has performed well, with returns of 7.5 per cent on the MCX and 8 per cent for Spot Gold in international markets. Currently, gold prices are trading over Rs 60,000 per 10 gms on MCX while experts are still bullish on the yellow metal and expect it to cross the level of Rs 70,000.

“We expect gold prices to move higher towards Rs 68000/10 gms till next Akshay Tritiya and investors are advised accumulate on dips towards Rs 57000-58000/10 gms as an opportunity to accumulate the metal.” AngelOne stated in its Akshay Tritiya Gold Special Report. The report also stated that resistance could be seen at Rs 68,000 to Rs 68,500 ($ 2,270 - $ 2,290) levels. Above the levels, the next resistance levels would be at Rs 72,200 ($2,410) levels.

 Pritam Patnaik, Head - Commodities, HNI & NRI Acquisitions at Axis Securities gives the target of Rs 65,000 in the medium to long run. 

"The possibility of an impending recession, owing to extended periods of high-interest rates, failing banks, and the collapsing dollar index, has further added to the safe haven appeal of Gold, reflected in the gold prices. These factors could propel Gold towards Rs 65000 in the medium to long term. In the near term, the central bank's fight against the sticky inflation still wages on," Patnaik said.

"The US FED has set a target inflation rate of 2 per cent. To achieve the target, it may go ahead with an additional 25 basis points increase, which might positively impact the dollar index and may hurt the non-interest-bearing asset like Gold. This correction, if any, can be used to build a long-term position in the yellow metal. Investors holding on to physical Gold may continue to hold with a target of Rs 65,000. We recommend new investors buy on dips. Those looking for other gold-related instruments can opt for Gold ETFs,” he added.

The expert is of the opinion that Akshaya Tritiya will be as lively as ever, but the traditional practice of purchasing physical gold may be subdued due to soaring gold prices making it challenging for potential investors. 

“We expect symbolic buying to continue, but the quantum may taper. This development might negatively impact the overall demand generally witnessed during this period. Last year, Gold rallied close to 14.3 per cent, in line with our projected price trend. Off-late, Gold prices have rallied as the market widely anticipates that we are in the last legs of arguably the longest, if not the most painful, interest rate hike cycles,” he noted.

Since last week, before Akshaya Tritiya, gold price has been holding near Rs 60,000 down from Rs 61,350 odd levels in MCX. 

"Broadly outlook remains positive for Gold as the interest rate cycle can come to a pause if not reversed in the next 3 months. The central banks have been buying Gold also the modes of buying Gold have increased in recent times suggesting a forecast of pickup in demand hence provisions have been made for accumulation for participants,” explained Jateen Trivedi, VP Research Analyst at LKP Securities.