Impact on gold prices: Fundamental backdrop of lower interest rates and geopolitical uncertainty looks supportive for gold
FinTech BizNews Service
Mumbai, March 21, 2024: Post US FED policy, Ghazal Jain Fund Manager, Alternative Investments, Quantum AMC, and Shashank Pal - Chief Business Officer, PL Wealth Management, at Prabhudas Lilladher, have shared their studied comments on the evolving scenario on the gold.
Ghazal Jain, Fund Manager, Alternative Investments, Quantum AMC: “The Fed in its latest policy decision kept its key interest rate unchanged and signalled that it remains on track to cut interest rates by 75 basis points in 2024, easing market concerns of fewer rate cuts amid recent data showing sticky inflation. Markets are now pricing in a greater chance, around 70%, that the Fed will begin cutting interest rates at the June policy meeting, up from 55% before the Fed policy. US Dollar declined, and international gold prices touched new highs in response to this dovish hold. While fundamental backdrop of lower interest rates and geopolitical uncertainty looks supportive for gold, some profit-taking can be done at these levels. Fresh buys can wait for price dips.”
Shashank Pal - Chief Business Officer, PL Wealth Management, at Prabhudas Lilladher: “Federal Reserve’s March policy was on expected lines. Fed chair Jerome Powell reiterated that inflation remains above comfort zone and rate cuts will be delayed. Though he indicated that three cuts will happen this year, I do not think the quantum of rate cuts will be more than 75 bps. Gold has always been a good hedge against inflation and prices will continue to remain strong throughout 2024. Whenever rate cuts start, easy money will result in prices rallying further. Sluggish economic growth, geopolitical uncertainty and elections in 50+ countries means investors will keep looking at safe investment avenues such as gold. Gold has given 12% CAGR over last 20 years; 10.3% CAGR in last 15 years and 7.5% CAGR in last 10 years. So, it is always good to have gold in portfolio. Whether physical gold or Sovereign Gold Bond or ETF, that will be a personal choice based on socio-economic background and evolution as an investor. In India, people prefer physical gold because they look at the asset as ‘storage of wealth’, ‘passing on to next generation’ or ‘emergency recourse’ rather than an investment. Only in last 10-15 years, the mindset has changed in semi-urban and urban population.”
