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‘Medium to long-term gold and silver as an investment’

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With uncertainties in the world – economics and geopolitics – investors with medium to long-term prospects can gold and silver in their wallet, said: Motilal Oswal Financial Services Ltd.



An allocation of 20 percent to gold exchange-traded funds (ETF) in an investment portfolio during Diwali is ideal, he said. Quantum AMC.

Geopolitics, central bank action and concerns about inflation are themes that are not only boosting precious metals but also driving volatility in other asset classes, Motilal Oswal said in a report.

The US Federal Reserve is rushing to raise interest rates at an aggressive pace with the aim of taming inflation.

On the other hand, geopolitical tensions between Russia-Ukraine and other economies continue to fuel turmoil in the economy.

All of this raises questions about the pace of global growth, institutions like the IMF have also lowered their forecasts on it.

Motilal Oswal identified India as one of the largest consumers of gold and silver and said there has been a lot of development, especially on the domestic front, which is supporting prices.

“Government initiatives such as setting up GIFT city, signing an FTA (free trade agreement) between UAE and India (implying that about 200 tons of gold will be imported from the UAE at a tariff rate of 1 percent – TRQ) and changes in import duties,” the company said.

This year, macro factors will dominate the movement in metal prices, as a tighter monetary policy scenario is not a great phase for non-performing gold, the report said.

The gold price trend is caught between the struggle of bulls and bears.

Extreme negatives lead to buys in gold, which is why it is important for medium to long-term investors to see a broader picture, Motilal Oswal said.

Aside from a few dips, the overall trend for gold has remained positive, and returns are pretty decent too, the company added.

The company has proposed an accumulation of gold at Rs 46,800-Rs 47,500 with a medium term target of Rs 53,000 and a long term target of Rs 58,000 with an expected increase of 8-17%.

In the case of silver, Motilal Oswal said the accumulation zone will be Rs 53,500-Rs 54,000 with a medium-term target of Rs 64,500 and a long-term target of Rs 73,000 with an expected increase of 13-28 percent.

According to Quantum AMC, the correction in gold price from its peak has made the metal affordable this holiday season.

“To get the most out of the correction, we recommend investing in efficient products such as gold ETFs (exchange-traded funds) to maximize benefits,” Quantum AMC said.

Owning physical gold comes with additional costs, such as incurring fees, store premiums, storage issues, and a lower redemption value.

Emkay Global Financial Services, for its part, said in a report that the current weakness in gold could continue until there is more concrete information about the state of the economy in major economies, especially against a backdrop of an aggressive central bank trade-off that is unfavorable. for growth and promoting stability.

In general, gold is considered a hedge against inflation, but this time it doesn’t seem so.

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