Even as the year FY23 was gripped with layoffs and economic uncertainties, the domestic equities market saw high volatility. Gold and equities generally move in opposite directions — when equities do well, investors instead of investing in gold go for equities; and when there is uncertainty in the market, investors take out their money from markets and invest in safe-haven assets like gold. Here’s how equities and gold did in the just-concluded financial year 2022-23:
Gold prices in last FY23 jumped a massive Rs 8,000 in domestic markets from Rs 52,000 to 60,000, thus giving a return of 15 returns beating all other asset classes.
Jateen Trivedi, vice-president (research analyst) at LKP Securities, said, “Gold has been proven a perfect hedge in the Portfolio giving out strong returns. The Nifty has given near flat to negative returns in this FY23, as the escalation in the geopolitical tension due to Russia and Ukraine issue brought the inflation much higher globally wherein the economy was already trying to digest the liquidity infusion done by the US in the pandemic, which gave inflation the push in quantitative easing phase.”
He said going ahead, gold still looks lucrative in terms of return on investment (RoI) from a safety perspective where the inflation still 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 per cent return in FY24.
“The prices can easily touch 66,000-68,000 on base case performance before we reach the FY24 end next year. On the back of weak and uncertain performance in risky assets, it is strongly advised to remain invested in gold for further 10-15 per cent returns on the base case and 15-20 per cent on the bull case scenario,” Trivedi said.
In March, even as the US banking sector faced the worst period after the global recession in 2008-09 and amid the talks of recession, the safe-haven gold gained, with its price crossing the Rs 60,000 mark to its lifetime high. On the Multi Commodity Exchange, the gold future was on March 20 trading 1.5 per cent higher at Rs 60,274 per 10 grams during the day.
In the international market also, gold was up 0.57 per cent to cross the $2,000 mark to trade at $2,001.6 an ounce.
Two banks in the US, Silicon Valley Bank and Signature Bank, have collapsed. While, Swiss lender Credit Suisse and US-based First Republic Bank also struggled and securing support to survive.
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