Gold prices increased by double digits in fiscal year FY23, proving to be one of the best alternatives for providing strong returns in the face of extreme volatility in equities. Whereas the Nifty and Sensex have given generally flat to negative returns in FY23, gold has risen by a whopping 15% as a result of macroeconomic risks. The fiscal year FY24 appears promising for bullion, with the potential to rise by 15% to 20% in a best-case scenario. So, what is the next gold level in FY24?
Last week, on March 31, MCX gold futures maturing on June 5 fell 295 or 0.49% to 59,600 per 10 grams, bringing the fiscal FY23 to a close. However, futures prices had risen to as much as $60,065.
READ ON : HERE IS HOW GOLD HAS BEEN USED BY CENTRAL BANKS DURING THE PAST 30 YEARS
Gold futures on the MCX tracked international spot gold, which fell 0.6% to near $1,968 per ounce on Friday. However, as bets on the pace of US Federal Reserve interest rate hikes have increased, investors are likely to be drawn to metals while remaining cautious of the dollar.
According to Jateen Trivedi, VP Research analyst at LKP Securities, gold prices in the domestic market increased by 8000 rupees in FY23, from 52000 to 60000, representing a 15% return. The Nifty has given flat to negative returns in FY23, as the escalation of geopolitical tensions in Russia and Ukraine pushed inflation much higher globally, at a time when the economy was already trying to digest the liquidity infusion done by the US in the pandemic, which pushed inflation into the Quantitative Easing phase.
“Gold has proven to be a perfect hedge in the Portfolio, yielding strong returns,” he said.
READ ON : ANALYSTS PREDICT A 25 BASIS POINT HIKE ON APRIL 6 AND A RATE CUT IN DECEMBER
The outlook for FY24 appears to be favourable to gold.
“Going forward, Gold still looks lucrative in terms of ROI from a safety perspective, where inflation remains high globally and the interest cycle, which is yet to ease, will also provide the push needed for Gold to run and give 10-15% return in the coming years,” Trivedi said.
According to LKP Securities analysts, gold prices could easily reach 66000-68000 on a best-case scenario even before the end of the fiscal year next year.
READ ON : THE INCOME TAX DEPARTMENT’S INSTRUCTIONS ON HOW TO E-VERIFY AN ITR USING A DEMAT ACCOUNT
Due to the poor and uncertain performance of risky assets, the brokerage’s analyst strongly advised investors to stay invested in gold for another 10-15% return on the base case and 15-20% return on the bull case scenario.
Similarly, Rahul Joseph, Founder and Director, stated, “Gold prices in India have been on the rise for the past few years, and this can be attributed to a variety of factors such as the global economy, currency fluctuations, and changes in demand and supply of gold.”
READ ON : WHAT ARE THE TAX ADVANTAGES OF SELF-EMPLOYMENT VERSUS NPS SALARIED EMPLOYMENT?
“Demand for gold in India has remained strong due to its cultural and religious significance, particularly during festivals,” Joseph added. It has long been a popular investment option in India. For the majority of people, it is a safe haven asset that can serve as a hedge against inflation and currency depreciation. Despite some fluctuations, the rising trend in Indian gold prices is expected to continue in the near future.”
