Akshaya Tritiya: Is Investing in Gold This Festival a Wise Choice?


Gold has seen a promising rise recently, with gains of over 15% in the domestic market throughout 2023. This positive trend has continued into 2024, with MCX gold prices climbing 12.5% so far this year.

On May 10, as India celebrated Akshaya Tritiya—a significant festival for buying precious metals—gold prices surged. The yellow metal, often considered a safe haven during market volatility, was trading about 1% higher at over Rs 72,000 per 10 grams on the MCX.

Gold’s Recent Performance

In 2023, gold achieved a notable 15% increase in domestic markets. This upward trajectory has persisted into 2024, with the MCX gold rising 12.5%, slightly ahead of the 12.2% gain seen in spot Comex gold. Factors such as geopolitical tensions, central bank policies, and fluctuations in the dollar index contributed to this performance.

Central banks globally increased their gold purchases significantly in 2023, acquiring 1,037 tonnes, which supported gold’s value amid various global uncertainties.

ETF and Mutual Fund Trends

Gold ETFs saw net outflows of Rs 395.6 crore in April, reversing the inflows experienced earlier. Despite gold's price rise, equity markets have outperformed, leading some investors to move funds from gold ETFs. However, gold mutual funds have performed well, with one-year and three-year returns of 15.27% and 13.35%, respectively.

Globally, gold ETFs experienced net outflows of $2 billion in April, although gold itself ended the month with a 4% gain, reaching $2,307 per ounce.

Future Outlook

Gold’s future performance will likely be influenced by central bank policies, geopolitical developments, and economic indicators. The potential for interest rate cuts later in the year could weaken the dollar, which might further benefit gold prices. Given gold’s role as an inflation hedge, it is expected to remain a strong investment choice.

For those considering investing in gold during Akshaya Tritiya, a systematic investment plan could be beneficial. Investors might buy during price dips while aiming for potential price targets of Rs 74,000 and Rs 78,000 per 10 grams. However, a significant drop below Rs 65,200 could lead to lower price levels.

Overall, with gold’s recent strong performance and its role as a hedge against economic uncertainties, investing in gold this Akshaya Tritiya could be a prudent decision for those looking to diversify their portfolios.

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