NEW DELHI: Dhanteras is traditionally the most auspicious day to buy gold, and this year, from a returns perspective, analysts believe it is the best time to grab the yellow metal as the outlook is very positive.

In the last couple of years, gold has proved to be one of the better investment avenues. From 2018 Diwali to 2019 Diwali, it gave a return of 20 per cent. In the last one year, it has beat that performance, returning 31 per cent. And, it may replicate this stellar performance for another year, analysts believe.

“The prices are close to Rs 50,000 per 10 grams now and no better time to accumulate gold as an investor, especially the ones who missed the recent rally. The future still looks bright for gold prices considering the festive demand, uncertainty linked to US elections with a possible new President-elect bringing in a lot of policy changes,” said Sunilkumar Katke, Head – Commodity and Currency, Axis Securities.

Apart from the good luck charm, gold has been used extensively as an investment and to store value, especially during times of crisis. It also provides a hedge against inflation.

How much return is possible?
Financial advisors say gold should be an important part of any investor’s asset allocation strategy. In an survey, analysts suggested allocating 5-15 per cent weightage to gold. So, what kind of returns can one expect from the yellow metal?

In the short term, analysts believe the metal will hit Rs 53,500 level, meaning an upside of about 7 per cent from current levels. In the long term, it will likely make fresh record highs, said analysts.

“For the long term, buy gold in a staggered manner at first levels of around Rs 49,200-48,700 per 10 grams and second level of Rs 47,700 for a target price of Rs 56,100 initially and then Rs 60,500,” said Sugandha Sachdeva, VP-Metals, Energy & Currency Research, Religare Broking.

This translates into a potential upside of over 20 per cent.

Gold ETFs: Best way to invest?

There are three predominant ways to invest in gold — physical metal, sovereign gold bonds and gold ETFs — the last of which is gaining traction lately, especially among the younger generation which does not want to handle physical gold.

Besides jewellery, traditionally, gold coins or gold bars have been the default option for most of the investors. But now gold ETF provides a cost-efficient and convenient way to purchase gold for investment purposes. They are also the best way to invest in small amounts or in a periodic manner. Moreover, they are relatively easier to liquidate as they are traded on exchanges.

“When compared to physical gold, gold ETFs offer some distinct advantages such as less worry about storage and theft as it is held in Demat form, lower cost of acquisition given the absence of making charges and other related expenses. For those investors looking to meet any future requirement of gold, they can consider doing a SIP for as low as Rs 1,000 every month in Gold Fund of Funds. This will enable them to collect gold units over a period of time,” said Nitin Kabadi, Head- ETF Business, ICICI Prudential AMC.

Gold ETFs have been garnering investment for the last few months, especially at the time when equities have seen outflows. The category continued to receive net inflows in the month of October too. That made it an uninterrupted net inflow for seven months in a row.

The Gold ETF category received a net inflow of around Rs 597.3 crore in September and Rs 384.2 crore in October. This year so far, the category has received a net inflow of Rs 6,341.2 crore, data from Morningstar said.

“With all major economies struggling to get back on growth trajectory due to the adverse and huge economic impact of the coronavirus pandemic, gold, with its safe-haven appeal, has emerged as one of the best performing asset classes and a preferred investment destination among investors,” said Himanshu Srivastava, Associate Director – Manager Research, Morningstar India.

Some brokers like 5Paisa are allowing investors to buy for as low as Rs 50. “Paper gold is gaining popularity among millenials and zillenials. Many youngsters understand the importance of gold as an investment in a diversified portfolio rather than just as pieces of jewellery. They want it to become a liquid investment. Also many want to invest in gold like stock and mutual funds in small amounts,” said Prakarsh Gagdani, CEO,

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