Best ways to invest in gold this Akshaya Tritiya on 14 May 2021

Akshaya Tritiya falls on May 14, 2021. Sovereign gold bonds, gold ETFs and gold mutual funds are recommended to buy the yellow metal electronically.

Indians love to buy gold, especially on Akshaya Tritiya. Now, gold exchange-traded funds (ETF) and sovereign gold bonds issued by the Reserve Bank of India are attractive modes of investing, as the payoff is in line with movements in gold prices. In the backdrop of the raging COVID-19 pandemic and economic slowdown, investors can buy gold as part of their overall asset allocation through these instruments rather than as jewellery, especially as shops may be shut due to lockdowns.

Demand for gold is back

In recent months, economies around the world have slowly opened up. India imported 321 tonnes of gold in the quarter ended March 2021, up from 124 tonnes a year ago. Investors are slowly accumulating gold. For example, gold ETFs saw net inflows of Rs 662 crore and Rs 680 core in March and April 2021, respectively.

Be realistic about returns

A few investors may think that a repeat of last year's run is on the cards. However, it may not be the case. As mentioned earlier, the situation has changed a lot. Gold prices may not necessarily move in one direction.

"Watch the movements in alternative asset classes like digital currencies, US yields & equity markets, as these factors can potentially dent gold's rally to some extent," says Nigam. He recommends accumulating gold on dips instead of buying it in a single shot.

Be realistic about the price targets. "Gold in the near term should touch Rs 50000 per 10 gram and eventually hit a new high of Rs 56,500 or higher over the next 12 to 15 months," says Damani.

Asset allocation, the key

You can achieve this allocation to gold by investing in units of gold ETFs or sovereign gold bonds (SGB). Currently, you can buy them from the exchanges. The details of the fresh series of SGB issuances for this fiscal were released on Wednesday. While buying SGBs and gold ETFs from the exchanges, do check for availability of liquidity. If you are keen on liquidity, you may also consider investing in a gold saving fund which assures liquidity, but comes at an extra cost.