This Raksha Bandhan, you may renew the vow of protecting your sister through a gift of gold. The gift of gold may be shared in the physical form through gold coins or gold jewellery. In the digital form, you may invest in the name of your sister in gold ETFs or Sovereign Gold Bonds. But is it a good idea to gift gold to your sister on Raksha Bandhan? Let’s take a look at what the trends say about the yellow metal as an asset class in 2022.
While the ornamental value of gold remains evergreen, its financial value has also strengthened in 2022, especially due to uncertainties in the traditional financial world. Currently selling at around Rs 52,000 per 10 gram (for 24 carat), reports have shown that Gold emerged as the best-performing asset class for the first seven months of 2022.
“Gold has emerged as the best-performing asset class for the first seven months of 2022. As an asset class, Gold has been the beneficiary of high volatility in the equity market since 24th February 2022, driven by the prevailing geopolitical crisis, rising inflationary expectations, and rising oil and commodity prices,” Axis Securities said in its recent Multi Asset Strategy Report.
“These macro developments are limiting the performance of equity as an asset class and a clear direction is likely to emerge only after the volatility settles at a lower level for a longer time. Until then, gold will continue to find an edge over the other asset classes,” it added.
Gold is Good
Experts are of the view that Gold would continue to be treated as an instrument providing flight to safety as slowdown risk mounts over the US market led by aggressive rate hike expectations. Under such circumstances, it may be a good idea to gift gold or invest in the yellow metal in the name of your sibling.
In the last two months, gold prices have found support from the cool-off seen in the US bond yields, which are now hovering around 2.8% odd levels. Earlier during mid-June 2022, it went up to 3.48% levels on an expectation of aggressive rate hikes.
“Based on the current macroeconomic development, Gold will continue to be a preferred asset class until uncertainties over the Russia-Ukraine conflict fades and will continue to attract investments as a proven hedge against other asset classes,” the report said.
Gold buying trend in India
According to World Gold Council, the Gold demand in India remains tepid in July due to muted rural demand, higher import duty on gold and the wedding season drawing to a close.
However, the retail demand witnessed an improvement during the third week of July due to a correction in the domestic gold prices but customers held back purchases expecting further corrections in prices.
“Retail demand saw marginal improvement during the third week of the month due to a correction in the domestic gold price, however, consumers held back purchases in expectation of a further correction to come,” WGC said in a report.