Today is Akshaya Tritiya, which, is considered a highly auspicious occasion. It is widely believed that any investment made on this auspicious day shall yield bountiful results, hence people in India tend to buy Gold or related asset class on this day.
Gold price, which is trading at Rs 71,502 for 10 grams of gold with 999 purity, has witnessed a remarkable rise in the last one year; it has grown by around 18% from Rs 60,616 on previous Akshaya Tritiya (which was on April 22, 2023), according to the India Bullion and Jewellers Association. If we take a 5-year period, then gold has risen 2.25 times since the Akshay Tritiya day of May 7, 2019, when the price was Rs 31,729.
Is It The Right Time To Invest In Gold?
Experts suggest diversifying investments across various asset classes balances risk and returns, while strategic timing of gold purchases based on market trends can offer better opportunities for maximizing returns.
Bhavik Patel, Commodity/Currency analyst at Tradebulls Securities, said: “Trend for gold is up, that statement is not debatable and by extension, gold-related stocks are expected to perform well. The start of the year was strong for gold as it made fresh all time high but delay in rate cut from the Fed has dented some of its shine however, gold has proved to be quite resilience with correction coming small. Now again, hope of rate cut in September have attracted markets attention due to weak US jobs data. Gold have reacted positively on this data and its journey on the up has resumed again.”
Tanvi Kanchan, Head – UAE Business & Strategy, Anand Rathi Shares and Stock Brokers, said: “Gold, on an investment front is used as a hedge in the portfolio against volatile periods of time. From an investment point of view, be it Akshay Tritiya or before or after it, the reasons have to be completely different. The parameters based on which they invest have to be different, which is to be a part of an overall portfolio, an allocation of 5 per cent-10 per cent to provide diversification to the portfolio and limit the overall downside of holding, to hedge against inflation because for most of the years and for a long period of time, gold has been seen beating inflation and continues to hold the purchasing power of the rupee or currency. On an average, if we look at the last 15 year data, we have witnessed gold deliver ~10% CAGR post the Akshay Tritiya. There have been short-term volatility, however, in the longer term, the prices have been consistent and steady.”
Hareesh V, Head of Commodities, Geojit Financial Services, said: “Since domestic gold prices are hovering near record highs, there is a chance of a technical correction in the immediate run. But in the long run, firm overseas prices, increased physical demand, and a weak rupee would assist prices to retain their bullish outlook. Hence, cautious buying in minimal quantities is recommended at this Akshaya Tritiya.”
“Meanwhile, in the international market, a weak US dollar, hopes of interest rate cuts, escalating geopolitical tensions, worries over the global economic outlook, and high central bank purchases would be the positive triggers. However, firm global equities and any changes in the Fed’s policy decisions would cause a downturn in prices later. Gold is one of the best long-term assets which offers both safety and decent return to its investors. Domestic gold has more than doubled in the last 5 years, and it gained 10 times since 2003. So, investors can make use of every price correction to add the metal into his/her portfolio for long-term benefits,” he added.
Where Can You Invest?
Sovereign Gold Bonds/ Gold ETFs
Kanchan said: “Looking at it purely from an investment point of view, for investors who wish to have digital exposure to the yellow metal, Sovereign Gold Bonds can be a good gold investment avenue for the long term but if an investor wishes to sell the SGB before the eight-year maturity, either for rebalancing or liquidity purposes, he may be forced to sell the bond at a discount in the secondary market which would eat into the investor’s returns, partly or fully offsetting the gains made from the 2.5 % annual interest.”
“In contrast, Gold ETFs/Funds are very liquid. Thus, from a portfolio perspective, Gold ETFs/Funds are more efficient. Gold Funds have the benefit of ETFs as underlying also exposure to certain gold stocks therefore creating a buffer for the gold returns. So Gold funds should be chosen for investments to take a Gold exposure,” she explained.
Gold Related Stocks
Even as Gold prices trade at record high levels, shares of Gold making firms, namely jewellers, have been underperforming on the bourses amid concerns of lower demand owing to high prices.
Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd., says Akshaya Tritiya, an auspicious day for gold purchases in India, presents both opportunities and challenges for investors considering gold-related stocks. While the occasion traditionally fuels demand, potentially boosting jeweller stocks, current high gold prices may dampen overall sales.
“We recommend caution due to this and the possibility of a short-term market correction. However, gold’s long-term potential as a hedge against inflation and economic uncertainty remains attractive,” Gour added.
Stock Picks for Akshaya Tritiya: Titan and Kalyan Jewellers are our top picks for those who are interested in buying gold stocks today.
Titan – One can buy at current levels Rs. 3290 for Target Rs. 3500/3700+ with Stoploss Rs. 3050
Kalyan Jewellers – One can buy at current levels Rs. 394 for Target Rs. 450/500+ with Stoploss Rs. 350
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