Experts are bullish on the metal and here are few of the reasons which provide an insight why and to what extent the precious metal can provide us gains on our metal investment:
1. Liquidity ramp up; Interest rates to be lowered or held steady:
The US-China trade war situation resulted in global growth disruption and economies world over were feared to face a slowdown, though such concerns have now receded. And to provide a boost to global economies, central banks across the world are likely to ramp up liquidity and amid the move, there can be a chance that interest rate will be cut further or held steady, and this will augur well for the precious yellow metal, providing support to its international price.
2. Continuing rupee depreciation:
Most of the gold is imported in India and India is the second biggest consumer of the yellow metal only next to China, and this is perhaps the main reason that is driving gold prices. So, being a perfect hedge against inflation, it helps you tide over uncalled for times.
3. On an absolute basis, experts expect gold to yield 30% returns in 2 years time:
While for some time i.e. 5-7 years, the returns from gold investment have been sub-nominal, experts expect the returns to move back to historical mean and the returns over the years have been just an aberration as witnessed with some other assets as well.
4. Gold rallies in spurts:
While the current upbeat equities market and expected election outcome can weigh on the rupee and hence provide a downside to gold for some time, investors looking at investment in gold, should remain invested for a longer tenure to reap real gains on the investment.