Gold may not shine in 2014

Mumbai: Investment in gold in 2014 is not expected to fetch good returns as experts pointed out that the yellow metal globally has lost its appeal as a safe haven asset due to improvement in growth prospects in US and other developed economies.

According to them, global Exchange Trade Funds (ETF) have already liquidated their positions in gold and are now moving towards riskier assets like equities aiming higher returns. While a weak rupee is expected to stem a major downside for domestic gold prices, bullion experts believe that the possibility of a major upside is very limited in India.

“As of now the outlook remains negative. There is a higher probability of gold prices coming down as riskier assets have again started doing well. Investors could think of taking fresh exposure to gold when its prices come down to Rs 25,500 or Rs 26,000 per 10 gram in the domestic market,” said Naveen Mathur, associate director, commodities and currency, Angel Broking. 

Currently, the yellow metal in India is trading at around Rs 29,500 per 10 gram. In 2013, while the prices of gold crashed 28 to 29 per cent in the global market, the domestic prices dropped just eight to nine per cent following the sharp depreciation in the rupee. “This is not the right time to invest in gold as the yellow metal is still in a bearish phase,” observed C.P. Krishnan, whole time director, Geojit Comtrade.

However, Krishnan said that the prices of gold in the domestic market would largely depend on how the Indian rupee fluctuates in relation to the dollar.

According to Prithviraj Kothari, managing director of Riddisiddhi Bullion, gold prices in the domestic market are expected to move in a range of Rs 25,000 and Rs 33,000 per 10 grams with the average base price expected to be around Rs 28,000 per 10 grams.

However on a different note, Kothari said that investors looking at gold as an investment option should show a little amount of patience.