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Market expecting more gold buying by the uber rich this Akshaya Tritiya

On an average, around 4 per cent of average Indian HNI portfolio is invested in gold.

, ETMarkets.com|
May 07, 2019, 01.52 PM IST
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Should you buy Physical Gold, Gold ETFs or Sovereign Gold Bond this Akshaya Tritiya?
World Gold Council said India recorded an increase in golf demand during the first quarter ended March 31.

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GOLD
A host of triggers including escalating in trade tensions between China and the US, global growth concerns and US Fed pausing interest rate are expected to give some push to gold prices in the near term.

This has made wealth managers to project more interest among high networth investors (HNIs) to increase exposure to the yellow metal.

Is it a signal for you to add gold to your portfolio this Akshya Tritiya, the day traditionally considered auspicious for gold buying in India.

The love for gold is not limited to HNIs in India. Robust demand from average households makes the country the world’s biggest consumer of the yellow metal.

The precious metal has remained lacklustre past five years. In the international market, gold traded at $1,284 per troy ounce on Tuesday against $1,298 on the same day in 2014. In the domestic market, the yellow metal gained around 5 per cent during the same period to Rs 31,467 per 10 gm from Rs 30,000.

“Rs 30,500-30,300 is an ideal range to buy gold in India,” says Angel Broking, a Mumbai brokerage.

According to the Knight Frank Attitude Survey, 14 per cent of Indian UHNIs are likely to increase their investment to gold asset in 2019, 3 per cent higher than that in 2018. Globally, 20 per cent of respondents int he survey said they are going to increase allocation to gold in 2019 compared with 11 per cent who cited increased allocation in 2018.

UHNIs’ positive attitude towards gold as an asset class has also gone up in rest of Asia too, with 25 per cent expecting an increase in allocation compared with 19 per cent who cited an increase in allocation in 2018.

On an average, around 4 per cent of average Indian HNI portfolio is invested in gold.

Analysts say the higher positive sentiment is expected to translate into incremental gold purchase in Indian this Akshaya Tritiya.

Shishir Baijal, Chairman & Managing Director, Knight Frank India, said, “Globally, bullion led by gold has always been considered a safe investment and in countries with cultural affinity towards the yellow metal, we are seeing a renewal of interest in this asset class.”

“With the optimistic outlook towards the asset class, we expect a number ultra-rich to purchase gold both for investment and consumption purpose on the auspicious occasion of Akshaya Tritiya,” Baijal said.

On the monthly price chart, gold made a high of Rs 34,031 in February and has come down since to trade at Rs 31,560 on Tuesday.

Long-term price charts show a positive bias.

“As per the moving average, prices are trading above 10, 20 and 50 EMA, which show the strength in the Gold Prices. Technical indicators RSI and MACD are showing negative divergence, which indicates some correction is likely. But both the indicators are following a long-term positive trend since last two months,” Angel Broking said in a report.

World Gold Council said India recorded an increase in golf demand during the first quarter ended March 31. Consumption rose by 5 per cent to 159 tonnes during on fall in prices, which boosted jewellery sales during wedding season.

Gold demand stood at 151.5 tonnes in the same quarter last year. Analysts said an appreciating rupee and decline in gold price towards the later part of the quarter triggered a rise in Q1 gold demand.

Demand is likely to get a further boost in second quarter due to traditional wedding season buying, the Akshaya Tritiya festival and rising crop prices, PTI quoted WGC managing director, India, Somasundaram PR as saying.

“Gold prices are expected to remain attractive to boost consumer sentiments,” he said.

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