Sure, the current general elections scenario is not to have a direct impact on the gold prices, nonetheless any deviation in election outcome from the anticipated outcome can impact the economy overall which cast its impact on the rupee dollar exchange rate and hence the price of gold. So, the effect on gold prices due to any sharp changes in the rupee-dollar exchange rate cannot be negated. Dealers and analyst, anticipate the rupee to touch the levels of 58 against the dollar, if Narendra Modi government comes to the centre and hence with the sharp appreciation in rupee, price of gold shall see a fall.

Other than the fluctuations in the gold price that can be witnessed on account of the rupee vs dollar dynamics, market experts price of gold to see a downside pushed by other factors. Though, in the last one year due to a number of governmental measures such as the curb on import of gold to restrict the ballooning current account deficit (CAD) which was creating a havoc for the economy, price of gold in the domestic market has increased approximately 12%. In contrast, price of gold in international markets that influences price of gold in India directly decreased 12.13%, the reverse impact in the price of gold in India was largely on account of the rupee volatility which depreciated to life-time low levels of appx 68 against the dollar.

The opinion that gold price in India shall take a hit is also on the back of the dynamics in the international markets. In the US, seeking the better economic outlook, Federal Reserve is continuously easing its bond buying programme and with it the funds that were flowing to different emerging economies in various asset classes will also take a hit and consequently the demand and price of the asset class.

The concern of a Ukraine crisis that renders gold again as a safe investment haven will increase the gold price only for some time. And, so the long term view held by most of the market experts opines that the gold price shall not see a sharp increase.

As quoted in the PTI report, Haresh Soni- Chairman of All India Gems & Jewellery Trade Federation stated "Due to the ongoing Lok Sabha elections there might be a problem in momentum this year during Akshaya Tritiya, as the general sentiment for bullion is weak. Last year, the price was very attractive".

Factoring in all such concerns, an individual who wish to capitalize on the occasion can and should only consider investment in gold coins in small amounts and not splurge excessively in gold. As the investment shall not earn you excessively in the one to two-year tenure, as any appreciation in gold price is not expected. Further, in case you still want to invest in gold and yet at the same time do not wish to be hit by the changes in its price, you can invest through gold savings funds.

GoodReturns.in