Sunday, July 21, 2024

Should You Buy Gold This Akshaya Tritiya? Read What Motilal Oswal Financial Services Suggests

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Investors are always on the prowl for opportunities to make money. Akshaya Tritiya has been seen as an auspicious day to start buying different assets. Over the years, jewellers have witnessed investors flocking to buy gold on this very day.

“Gold’s demand increases more during these festivals and same is expected this time too,” Motilal Oswal Financial Services said in a report.

“After a good rally last year, we witnessed some profit booking and consolidation at lower levels amidst the US Presidential election uncertainty, vaccine reports from various pharma companies and volatility in dollar and yields. This led to some profit booking in ETFs and CFTC positions suggesting that speculators too unwinded their positions hence affecting the overall sentiment. Although, with all these uncertainties, precious metal pack were backed by strong fundamentals which kept the hopes high for all bulls,” the company said.

“Import duty cut declared in the Union Budget, also weighed on the prices of the yellow metal and encouraged jewellers to import more, the company said. The effect can be seen as the March import number which was reported at 160T, 470% higher than the previous year,” it mentioned.

Should you buy gold this Akshaya Tritiya?

Gold is trading lower in the Indian market on Wednesday. On Multi Commodity Exchange (MCX), gold future contracted 0.15% to Rs 47,561 at 11.45 am. “Strong fundamentals is helping gold gain momentum and is justifying our bullish stance that we have been maintaining for more than a year,” Motilal Oswal Financial Services said.

“With physical gold there are many platforms like digital gold, ETF’s, and others which market participants can select depending on their risk,” Motilal Oswal Financial Service said.

“There are factors that the market participants are watching cautiously like falling dollar, higher US treasury yields, ETF demand picking up and falling global interest rates,” the brokerage firm noted.

“Although, central banks have continued to maintain a dovish stance, interest rates are near the lows. Now that Central Banks have started to buy again we expect that higher numbers in the future are likely to keep prices elevated. Rising coronavirus cases, continuous liquidity injections, rising inflationary expectations, economies growing on the back of debt, Middle-East tensions, trade war between US and China and few other factors continue to boost the sentiment and build a strong case for higher gold prices,” the company added.

“On the back of these above mentioned uncertainties, we continue to maintain our bullish stance on gold,” it further added.

“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 life time highs towards $2050 followed by $2200,” Motilal Oswal Financial Services said.

On the domestic front, the post budget prices correction is a good level to enter once again for and immediate targets towards Rs 50,000 and eventually hitting new highs of Rs 56,500 and above over the next 12-15 months,” it said.

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