Gold Review – March 2017

Gold View:

  • Gold has been traditionally perceived to be a safe haven currency at the time of geo political risk or Dollar weakening or fed rate cut.
  • In the month of Mar, the gold prices declined by almost 3%. This time, the Rupee also rose by about 2.8%. Oil prices hovered around the $52 mark testing the technical resistance.
  • INR has appreciated to 64.84 almost 2.8% MoM. The gold as an asset is becoming increasingly unattractive for domestic investors.
  • There are likely to be changes in the Gold Duty post implementation of GST, which may take away significant gains for the yellow metal over a period of time.
  • To sum it up, we expect the gold prices to remain range bound or fall as fed may hike rates and therefore other assets particularly equities may do well, followed by bonds .
  • We believe that India story is unfolding and it has a long way to go. Therefore, for long term growth seekers, equities are likely to be a better play followed by bonds and then gold bonds for domestic investors.