Gold has given a return of 13.93% in rupee terms since the beginning of CY2022 while Silver is up 11.76%.
What to expect, going forward?
Experts believe the current move northwards may sustain for long.
Shyam Sekhar, chief ideator at ithought Advisory expects rising geo-political risks to support gold prices, “as some countries, keen on staying away from the US dollar, are expected to further increase their gold purchases,” he said.
If inflation remains strong as now or cools down but remains relatively higher than the long-term average, and the Fed decides to stop raising rates to save the economy from sliding into a deep recession, gold prices may see a strong push upwards.
Apurva Sheth, head of market perspectives & research, Samco Securities, expects gold prices to move upwards in 2023 and touch Rs 65,000 per 10 gram.
Silver is not gold
Silver, however, may see some volatile journey. Silver, being more of an industrial commodity, may see some pressure, if recession hampers the sentiment, though it will try to catch up with gold prices.
“Prices of silver have consolidated for a long period of time and if the dollar index (DXY) moves down, we may see a fierce rally in silver prices,” says Sheth. He expects silver to touch the Rs 1 lakh mark over the next 30 months. In this journey, he sees Rs 75,000 per kg as resistance. Prices may consolidate around those levels, before going upwards.
Anuj Gupta, vice-president, research, commodity, and currency, IIFL Securities, foresees gold touching Rs 58,000-Rs 60,000 per 10 gram and silver touching Rs 75,000-Rs 80,000 per kg levels in CY2023.
Market participants see rising infections in China and price that in, along with recession in the US. If the situation improves, demand returns and China bounces back to normalcy, silver prices may skyrocket further.
What should you do?
The tall targets may make you think of going all out, chasing precious metals. But hold your horses and take a careful look at your asset allocation. If you have already allocated approximately 10 percent to gold, there is no need to act much. Avoid going overboard on any asset class just because it has done well in the recent past.
Investors should take around 10 percent exposure to gold and 5 percent exposure to silver through mutual funds
ETFs and savings funds feeding into units of ETFs can be good vehicles to achieve the desired exposure to gold and silver in a staggered manner. Long-term investors in gold can also consider investments in sovereign gold bonds (SGBs).