gold: Commodity Talk: Expect MCX gold to give 10–11% returns in 2024: Naveen Mathur

MCX Gold will likely witness new all-time highs, delivering 10–11% returns in 2024, Naveen Mathur, Director – Commodities & Currencies, Anand Rathi Shares and Stock Brokers tell ETMarkets as he recommends staggered buying in yellow metal futures on dips of 6–7% from the current levels.

What is your assessment of gold’s performance this year and do you think Nifty’s late surge has taken some sheen of the yellow metal?Gold witnessed one of the best returns of last 6 months in November as it traded with a bullish bias with traders starting to increase their positions for a hard economic landing and aggressive Fed policy easing next year. Recent monthly macro data, including reports showing moderating job growth in November amid cooling consumer prices in October led to augmented safe haven appeal of Gold with MCX prices rising to all-time highs in February futures to above Rs 64,000 per 10 gm levels. This precious metal had outperformed most traded commodities in the current year in International markets with future prospects for next year also looking firm as we head into 2024.

While gold is trading with net losses in December on the month-on-month basis and we head towards end of 2023, are there opportunities for traders/investors to make fresh moves?Opportunities do exist for traders/investors to make fresh moves as new highs are still possible in the coming quarter amid probabilities of an interest rate cut as soon as March 2024 increasing with 3 rate cuts being increasingly discounted for 2024.

However, pertaining to year end scenario, trader’s/fund manager could remain on profit booking mood as their yearly book closing to take place driving price volatility in near term scenario. One can look out for making fresh moves in Gold in dips of 2–3% from current levels in near term scenario.

What is the outlook of gold for 2024 and what levels do you see yellow metal hitting by end of 2024?Consumer spending is expected to grow at a weaker pace in the fourth quarter with this decelerating trend continuing in 2024. Home builder sentiment in US have also remained lackluster which weakens the outlook for residential construction towards 2024. As impact of higher interest rates starts to bite growth in coming quarters, markets anticipate interest rate cuts by the end of first quarter of next year.

Overall, historically gold has always delivered a positive monthly average return during times of hold in interest rate. Hence spot gold is expected to trade in the range of $1,900–$2,250 per ounce range in next 1 year period. Hence staggered buying in yellow metal is recommended on dips of 6–7% from current levels. There will always be good investment opportunities in gold.MCX Gold is likely to witness new all-time highs with targets of Rs 67,000–68,000 per 10 gm getting hit and there is a strong possibility of the higher target getting achieved. The possibility of returns of 10–11% remain intact in Gold, in 2024.What is your assessment of the performance of Silver, this year?Silver have experienced a roller coaster ride for 2023 with almost flat returns in international markets as compared to 10–11% return’s in Gold. Silver’s returns compared to Gold have diminished due to declining demand concerns.

What is the outlook for next year?Silver being an industrial commodity have seen almost 60 % of its demand coming in from industrial sectors while 40 % of same is driven by Investment demand. Persisting silver deficit of about 143 million ounces in the year 2023, could decline by 4 – 5 % in the year 2024. However Investor demand probably could support the sentiments with the macro conditions in 2024 are going to be much more favourable for silver than they have been this year. Overall we anticipate Silver to perform with decent returns in 2024 as compared to flat returns in 2023. Meanwhile Gold may continue to outperform Silver in 2024.

What should be the asset allocation for next year considering that a lot of hype is already being generated around the prospects of equity markets next year?Although with domestic general elections in place for next year we do see equity market delivering steady returns in first half of the year. However concerns of global slowdown persisting for next year could trim gains in the second half of the year while Gold is still expected to shine bright in first half of next year. We recommend allocating 10–15% of overall portfolio allocation into Gold for 2024 as a hedge against volatile equities.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)