Gold prices may stabilise at the current Rs 32,000 per 10 gram levels in the short run, and you should restrain your investments to small quantities, experts advise.
At the current level, large exposures to the yellow metal would not bring in much returns in the short run, experts warn.
The precious metal has jumped by around 35% since 2011 in rupee terms and crossed the psychological Rs 32,000-per-10-grams level on Thursday.
“The European Central Bank’s plan to buy bonds is expected to ease pressure in the short run. The fundamentals of gold remains intact in the long term,” said Chirag Mehta, fund manager, commodities, Quantum mutual fund. “Investors who do not have any exposure to it can buy small quantities whenever they see a small fall in the gold prices, such as what happened on Friday.”
Gold prices eased on Friday following the ECB’s announcements, as the investors were profit booking. The prices that had crossed the $1,700 an ounce on Thursday came down to $1,696 an ounce on Friday.
Industry experts say that if the global economies thrive, many investors would invest in riskier assets after exiting from gold, for better returns.
“Since no other asset class is giving good returns, investors who are looking at long term investment can have 10% to 20% gold in their portfolio. Gold is set to go up in long term and is could reach Rs 34,000-Rs 35,000 levels as the Indian rupee is expected to depreciate further and reach up to Rs 59 level against the American dollar,” said Hitesh Jain, commodity analyst, IIFL.
Domestic spot gold prices on Friday dipped below the Rs 32,000 mark to touch Rs 31,800 per 10 grams. Industry experts say that while gold continue to be an asset class that could give best returns investors should buy the yellow metal in small quantities and only when the prices fall.
Gold prices for October futures were at Rs 31,885 per 10 grams on Friday on the Multi Commodity Exchange.