Gold's safe-haven status is fading, says Yes Securities executive
Hitesh Jain expects gold to enter a period of cautious consolidation over the next three to five years.
Gold is moving away from its traditional role as a primary safe-haven asset, according to Hitesh Jain, executive vice president at Yes Securities. Speaking to Mint, Jain said the metal is entering a long period of consolidation that could last between three and five years.
Jain noted that gold prices in the MCX declined by approximately 5 per cent in October. He attributed this weakness to high real yields, specifically the US 10-year Treasury Inflation-Protected Securities (TIPS) at around 3 per cent, and a shift in investor preference toward the Swiss franc, the Japanese yen, and US Treasuries.
The expert suggested that the global economy is moving from an era of excess savings toward capital formation. This shift increases the cost of holding gold as governments and corporations compete for capital to fund sectors like defence, energy security, and semiconductor manufacturing.
In India, domestic demand for gold jewellery and physical bars and coins fell during the September quarter, according to World Gold Council data. Jain said high prices and rising household spending on education and housing have limited retail demand.
While central banks have increased gold purchases, Jain does not expect an immediate reduction in gold import duties. He advised investors to use a selective approach to buying during price dips rather than accumulating the metal indiscriminately.