Gold prices have fallen since August last year, while the benchmark stock indices (Sensex. Nifty) have gained 50 per cent during the last one year. Here are 5 reasons why gold may give better returns in the next one year.
Fears of interest rate hikes in the US
Gold prices in India are determined largely by international gold prices. International gold prices may rally if the US Federal Reserve starts to hike interest rates in the US. In fact, there are talks that the same may happen this year itself, which could push gold prices higher.
Gold prices vulnerable to rupee depreciation
Last week the rupee hit a 3-month low against the dollar. Each time the rupee hits a low against the dollar, gold prices rise in India. This is because we import all of our gold and if a importer was paying 60 against the dollar 3 months back for importing gold, he has to now pay Rs 61. One would bet against the rupee losing ground in the near future.
Prices are atleast 15% lower than last year
You are getting gold much lower than last year, when the price was Rs 32,500 at the same time in August last year. At the current market price of Rs 28,000, you are not going to be taking a big risk.
A great way to hedge your portfolio
The mantra to make money is to buy low and sell high. If you buy shares now, you are buying them at their highest level, while in the case of gold, you are buying at lower levels.