Akshaya Tritiya: BUY/Accumulate Gold For Rs 85,000 Target In 12 Month; Strategy For Buying Yellow Metal

Gold is sparkling the most this week, thanks to the occasion of Akshaya Tritiya where demand for yellow metal is high across India. Akshay Tritiya also popularly known as Akha Teej, is a spring festival which falls on the third lunar day of Vaisakhi month, signifying the third day of unending prosperity.

That being said, gold is recommended to accumulate or buy for a target price of Rs 85,000 in the next 12 months. However, for buying, the strategy is suggested to add smaller denomination gold rather than large purchases! That is because 10 grams of gold is most likely expensive for a middleman.

Currently, in India, 24k gold is over Rs 73,000 and MCX gold has jumped by nearly Rs 1,000 to hit Rs 72,634 high. In less than 5 months of 2024, 24k gold has surged by over Rs 10,000 or 14%. In metro cities, currently, the gold price is at Rs 73,150 in Chennai, at Rs 73,090 in Kolkata and Mumbai, and lastly, in the national capital, Delhi, the price is at Rs 73,240.

Meanwhile, there are some cities outside India, where gold is widely tracked in Indian rupees. One of the key factors is that gold in these cities is cheaper than compared to gold sold in retail stores in India, making it even more appealing to overseas investors. 24K of 10 grams is at Rs 64,877.23 in Bahrain, Rs 64,622.95 in Kuwait, Rs 64,787.05 in Dubai, and Rs 64,787.05 in Abu Dhabi among others.

Celebrated in many regions of India and Nepal, Akshaya Tritiya is auspicious day for launching new ventures, marriages, charity, and in investments like gold and property among others.

Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities said, "During the Akha Teej festive season, gold prices often experience fluctuations due to increased demand in the physical market, driven by auspicious events."

However, Trivedi also believes that gold is currently expensive in terms of 10 grams. He said, "While gold is considered auspicious for buying during Akha Teej, current prices around 71000 may be slightly expensive."

Therefore, Trivedi advises investors to accumulate gold in smaller denominations rather than making large purchases. Gold prices are a bit volatile due to the Middle East crisis along interest staying higher for longer can keep Gold in a bigger range of volatility.

Notably, the outlook remains positive for the yellow metal and Manish Chowdhury, Head of Research, StoxBox recommends BUY on Akshaya Tritiya.

Chowdhury said, "We continue to remain positive on gold and would advise investors to buy the yellow metal on the auspicious occasion of Akshaya Tritiya. The fundamental cornerstone for the current traction in gold prices has been the persistent and growing geopolitical risks, steady purchases by central banks and demand for jewellery and coins & bars which we expect to continue in future as well. It is worth noting that robust participation from emerging markets central banks and strong Asian retail buying, especially China, is a key characteristic which was not seen in the previous gold bull rallies.

Also, a StoxBox expert said there is a growing clamour that the interest rate hike cycle has peaked and we are nearing rate cuts in future which is positive for gold prices. Thus, Chowdhury added, "We expect gold prices to move towards the Rs. 85,000/10 gm mark in the next 12 months."

Additionally, Trivedi said, "Going forward, prices can be in the range of 69500 - 73000 for the short term, a break below 69500 will trigger 67000 as the next demand zone."