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Gold: Place long-term bets on structured plans, bonds for steady returns

From an advisory perspective, I suggest investors hold gold till December before taking a call on the yellow metal,

Hareesh V 

Gold

Roll-out of a uniform indirect tax code or GST and Prevention of Money Laundering Act, or PMLA, has put the market in a spot. At the global level, expectations that the Federal Reserve may raise interest rates for a third time by December this year has prompted traders to take a cautious stance on bullion. is highly sensitive to the interest rates and inflation and increases the opportunity cost of holding non-yielding bullion which is priced in greenback.

Looking ahead, I don’t expect any strong moves in prices in the immediate future in either direction, unless things change fundamentally. rate hike changes and trajectory are key factors that traders will keep a tab on at the global level. Back home, government policy decisions and rupee volatility would be the prime factors which could decide the direction of domestic prices in the near-term.

From an advisory perspective, I suggest investors hold till December before taking a call on the yellow metal, as the Fed will clear the air on interest rates by then. This will impact how the moves, which in turn, will dictate the trend in prices.

prices are ruling a bit higher in India as compared to international prices. Therefore, in the short term, it is better for investors not to take any fresh long positions. That said, they can continue to invest in in the typical formats by monthly or periodic incremental investments.  Since the Indian rupee is depreciating against currency, it is better for investors to take a long call on by investing in Sovereign (SGBs) periodically auctioned by RBI, which have several add-on benefits like sovereign guarantee, safety, easy liquidity among others. 

Hareesh V is Research Head, Geofin Comtrade

Disclaimer: Views expressed are personal. They do not reflect the view/s of Business Standard.

First Published: Tue, October 17 2017. 09:45 IST
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