This week saw the first time that gold surpassed the Rs 60,000 threshold. It increased as a result of the uncertainty that followed the bankruptcy problems that foreign banks like SVB, Signature Bank, and Credit Suisse encountered. Will the price of yellow metal keep increasing? Given that the price of gold has already risen dramatically, is silver a better option to store your money? In an interview with Sakshi Batra of BTTV, Navneet Damani, Head of Research for Commodities and Currency at Motilal Oswal Financial Services, discusses what the future holds for gold prices and whether silver is a good investment at the moment.
BT: What is causing the gold price to rise in such a manner?
Damani, Navneet: The rally is hardly a huge shock. We’ve been positive on gold for quite some time now. Beginning with the resolution of the COVID issue and the loosening of monetary policy, the support was eventually led by the conflict between Russia and Ukraine. The costs have increased by $350 in the last three months, as of this writing. The dollar index was observed to adjust from 115 levels to 100 levels. That represents a 15% correction from the top.
Second, we observed China reopening its doors. To refresh your memory, China is a significant gold importer. They’ve been operating essentially behind closed doors for the past two years. And when the market increasingly opens up, demand is probably going to be fairly strong.
Chinese people have always been savvy shoppers. And they began to take advantage of this opportunity when prices were low. Also, we saw that the financial crisis has accelerated during the past few months. A few significant declarations from stressed institutions have been made. The cost of living has been rather sticky. Even after a rate increase of 400–450 basis points over the previous year, American inflation is still above the 6% threshold.
That’s why it’s been a real pain. We anticipate the probability of either no rate hike or a hike of 25 basis points at the Fed meeting. The way the market operates has to be quite intriguing. What is the commentary, which is coming in? What is their position for the upcoming meetings? And what is likely to propel gold prices in the future?
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Is it a good time to invest in gold now? What about those who missed the bus?
Well, if you miss the bus, that’s fine, says Navneet Damani. But avoid pursuing the bus. It would be wiser for you to convert to another asset class, most likely equity, as an accident is probably just around the horizon and might provide you with some respectable gains. Currently, silver is also a very wise investment. At this time, I will still invest in silver rather than gold, in my opinion.
BT: What about people who had actually bought at the bottom and at this point in time they may be interested in selling their gold at Rs 60,000 or so? What should those people do?
Navneet Damani: Well, you have no date time to sell gold. I think before the Fed meet starts probably or market tops out over the next say probably one week or so. It’s a good opportunity. If you get Rs61,000-61 500. I don’t see that they will be holding on for a long time and it is better to exit and wait for better levels to re-enter.
BT: You’re more bullish on silver than gold at this point in time. What kind of levels can one expect in 2023?
Navneet Damani: We’ve had a good outlook on silver ever since it was around the Rs50,000–52,000 mark, and we’ve been publishing reports with a target price of Rs75,000 and a gradual increase to Rs84000 levels as well. Hence, we continue to have a positive bias, and we have observed that silver has not performed as well as gold has in recent runs up. In light of this, I would advocate waiting for a moderate decline before beginning to stockpile silver. Around Rs 80,000 would be the initial goal, and then Rs 84,000. That is a substantial increase of 15% to 18% from the current levels.
source from: msn.com
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