Today we have the auspicious occasion of Akshaya Tritiya, It is considered to be an auspicious day for buying precious metals in the Hindu culture.Most of people will be buying Gold as “Shugan” but should you invest heavily in Gold now as it has come down from high of 33K to low of 26K. My answer is No, Let me put down my reasoning.
- Technically Gold is trading below its 200 DMA, which suggests its in Bear market.Once the Support of $1427 is broken , Gold will see a free fall. Level as low as 1200$ can be seen.
- Gold prices have slipped almost 15 per cent so far this year, having posted annual gains in the past 12 consecutive years suggesting the Bull run might be over.
- Data for USA has been coming strong off late, which might prompt central banks to Stop QE, Once QE is stopped Dollar will see a Huge Jump and Gold prices will tank.
- The world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust, has reported 22 per cent fall in assets in 2013. Holdings have hit the lowest since August 2009.
- Inflation hedge: Headline inflation in India has likely peaked off, making gold less attractive as an inflation hedge. Wholesale price inflation is expected to have risen 5.5 per cent on year in April, a Reuters poll shows, marking the slowest pace since November 2009. Core WPI is expected to have risen 3.5 per cent.
So keeping the above data in Mind I will stay away from gold from Investment perceptive.
India, the world’s biggest gold consumer, is celebrating Akshaya Tritiya on Monday, considered to be an auspicious day for buying precious metals in the Hindu culture. While, most households will queue up to buy some jewellery on May 13, investors in gold are likely to stay away with the yellow metal on track to end its 12-year bull run.
One of my friend wanted to know whether to buy gold or not and he wants the same for the marriage purpose for next year, I have told him to make 25% purchase in 4 installments spread across a year so that he may pay the average price.
Thanks Shiva for your views. When we have necessity we need to buy Gold at any cost but when we are doing investment ,lets see the fundamentals first 🙂