As far as investing in equity market is concerned, the mutual fund houses exactly have all the ideas to keep the investors hooked. At time, they plan to launch same kinds of mutual funds but under different names along with different asset allocations, while in others, they intend to include some commodities to see some hedging effect.
Apart from hedging adding gold and silver in your portfolio can also help in capital appreciation. There are mutual funds which help investors to make investments in both gold and silver.
Several investors plan to put money in gold and silver exchange-traded funds (ETFs) so that these asset classes can help investors avail benefits of increasing gold and silver prices.
Performance of gold and silver
As the stock market fluctuates between highs and lows, less volatile nature of gold and silver lends much-sought stability. At the same time, these asset classes and help in generating necessary returns. Gold is a better investment option than equities these days.
Gold price touched record levels during first 3 months of 2024. Yellow metal opened the period on 2nd January at the price of US$ 2,041.20 per ounce. Therefore, this metal was coming off earlier highs which were touched in December 2023.
Gold was in rangebound for initial 2 months of 2024, hovering above US$2,000 level until this metal briefly surpassed the support in the middle of February. After this, gold fell to its quarterly low of US$1,991.98 on 13th Feb.
Post this, gold started a slow climb to the start of March. Then finally yellow metal soared t quarterly high of US$2,251.37 on 31st March. Since then, gold has been moving upward, briefly crossing US$2,400 on 12th April. As per World Gold Council (WGC), gold ETFs saw outflows in January and February, exhibiting declines of ~50.9 metric tons (MT) and 49.1 MT, respectively.
Silver prices too have seen a steady rise in 2024, touching INR 81,313 per kg on 8th April. This was seen after 7.19% rise in 2023. Leading brokerage house Motilal Oswal has been positive on silver’s future, expecting prices to touch INR 1 lakh or even INR 1.2 lakh over medium to long term.
Gold and silver prices- Understanding the relationship
Numbers exhibit a high correlation in gold and silver prices. Considering the present gold and silver prices, along with continuous volatility in stock markets, a range of investors continue to bet on drastic change in prices of both commodities.
While adding gold and silver in your portfolio can help hedge the portfolio, from store of value perspective, gold is better to hold as compared to silver. This is because supply of gold remains limited which brings stability in the value of gold. On the other hand, silver does not exhibit good store of value since its price has come down as a result of higher supply whenever it sees sharp increase in price.
The first 2 months of year resulted in some sort of steadiness in gold price. However, March saw strong gains and its prices reached highs. Yellow metal initiated the month strong as a result of solidifying belief that the US Fed will start to cut rates as early as June. As a result of this, buyers jumped back in the gold market.
Outlook for Gold and Silver prices
Adding gold and silver in your portfolio at this time seems feasible as experts and analysts are quite optimistic regarding their performances.
With second quarter kicking off, yellow metal has made some renowned and sustainable gains. It continues to make moves and has hovered around ~US$2,400 for the first time ever. Such new highs were mainly because of increased tensions in Middle East and fallout from Israeli attack on workers in Gaza on 1st of April.
April month has also seen escalation in war between Russia and Ukraine. There were renewed strikes on Kyiv along with other targets outside Donetsk. Experts believe that bullish momentum is expected to continue in gold up until Diwali festival. Trajectory of Fed policy is expected to significantly impact gold prices in 2024.
Gold prices seem to be promising in 6-month horizon as there are expectations of Fed pivot in 2H24, increased geopolitical tensions, global growth worries, and finally China’s economic struggles. Experts believe that the stage is all set for multi-year bull run. There are expectations that gold will touch levels of $2400-2500 by end of 2024.
On the other hand, The Silver Institute expects global silver demand to reach 1.2 billion ounces in 2024. This exhibits second-highest level on record. According to them, stronger industrial offtake should act as a principal catalyst for increased global demand. With this, sector should touch new annual high in 2024.