The sentiment of buyers is weak before Akshaya Tritiya this year as survival and saving cash for uncertainty is the preference of customers now.
On the occasion of Akshaya Tritiya 2021, the gold price in India is almost at the same level as was seen during the Akshaya Tritiya 2020. The price of gold per ten gram is currently at around Rs 47,000 after having recovered from the lows of about Rs 43,000 in the recent past. Even the gold futures prices on MCX have started to shore up recently. “The MCX gold price continues to exhibit a strong solid show after a big blowout of the US Nonfarm payrolls data. After hitting a more than two weeks low of Rs 46,462 MCX Gold made a reversal to currently trading around Rs 47,900. The Immediate resistance is at Rs 48250 and then at Rs 48360. So consistent trading above Rs 48400 will open doors for Rs 49000 – Rs 49700,” says Rahul Gupta, Head Of Research – Currency, Emkay Global Financial Services.
Overall, the gold price is flat over a 12-month period and is also around Rs 10,000 lower from its August 2020 highs. Will, there be enough gold buying on Akshaya Tritiya 2021 amidst Covid-19 remains to be seen. “Akshaya Tritya fell on 26th April in 2020 and sales were weak due to the challenging environment. However, in 2021, the same factors continue as there is a state-wide lockdown, most of the jewelry shops are closed, physical demand for gold remains muted. So, during these uncertain times, the sentiment of buyers is weak before Akshaya Tritiya. Survival and saving cash for uncertainty is the preference of customers now,” says Ketan Kothari, Director of Augmont.
According to Motilal Oswal Financial Services, “Prices have consolidated over the last few months and recently caught up some momentum and back to around $1800 on the COMEX where we are comfortable suggesting buying for a short to medium perspective targeting new lifetime highs towards $2050 followed by $2200. On the domestic front, the post-budget prices correction is a good level to enter once again for an immediate target towards Rs.50,000 and eventually hitting new highs of Rs.56,500 and above over the next 12-15 months”
The lockdown continues in most cities and buying digital gold can be an option that investors may explore. As a gold buyer, there are different options available in the market – Sovereign Gold Bond, Gold ETFs, Digital Gold or the physical gold itself in the form of jewellery, gold coins or even bars. Buying gold online through apps or websites is also possible now. Gold coins, bars and jewellery are available online as ‘Digital Gold’. Stock Holding Corporation of India offers ‘GoldRush’ on its website, while Motilal Oswal offers ‘Me-Gold’. The advantage they provide is that one can own gold with a very low initial investment in digital gold.
“With the Augmont Digi Gold platform, 24K Gold can be bought online 24 hours a day, 7 days a week, and 365 days a year with an amount as low as Re 1. The customer can take physical delivery of the gold at their doorstep and their Digi Gold is stored safely and is also 100% insured,” says Kothari.
Similarly, in the case of Paytm gold, 24kt pure gold can be purchased for an amount up to Rs 1 crore and the buyer can take delivery of the physical gold. Paytm gold can also be accumulated through Gold SIP as a regular saving option.
Digital Swiss Gold (DSG) is another option to buy digital gold. According to the company, DSG offers a cost-effective platform offering digital, mobile, and usable physical gold ownership. The company provides a modern way to buy and hold gold digitally in Switzerland for long-term savings as well as sell and send gold via a mobile app. As per the company information, by cutting out the middlemen and sourcing gold directly from Swiss refineries, DSG typically saves its clients up to 10% when compared to published Indian gold prices.
Will gold price go higher?
Gold prices in the post-pandemic world will continue to depend on several factors such as global economic growth, interest rates, rising US yield, inflation, and more. What is important is to diversify with 5-10 per cent of one’s portfolio in gold preferably through paper-gold investments.
Here is what Nirav Karkera, Head of Research, Fisdom has to say to gold investors in 2021. “While strategically allocating to gold makes a whole lot of sense, current economic context may create use for some tactical allocation to the asset as well. We are seeing global central banks and governments pushing for economic growth, albeit at the cost of higher deficits and stressed balance sheets. Key risks looming on the horizon include faster-than-expected reflationary trends and exorbitant equity valuations driven by abundant liquidity and shift towards risk assets. These risks lend support to the proposition of a strategic allocation to gold, from a risk mitigation standpoint. Strong demand from recovering emerging markets like India coupled with continued buying interest from global central banks strengthens the case for gold from a performance enhancement standpoint.”