How will interest rates hike affect gold and silver prices in 2023? Should you invest in gold and silver?

While it might seem tempting to purchase precious metals, you should balance your asset allocation.

Balance your asset allocation

It is essential to build a diversified portfolio, and purchasing precious metals is a step toward it. The previous three months could have been better if you had invested in gold and silver and not in different asset classes. Gold ETF has risen by 9.75%, and silver ETF by 22.55%. ETFs (exchange-traded funds) have been popular among investors to invest in gold and silver for a while now. While precious metals performed poorly in the recent past, the investing person shouldn't solely base their decision on the numbers. 

Read: Gold vs. Silver: Which is better for investment?

What Should You Expect in the Future?

The past two years have shown that investors want to buy low and book profits as precious metals gain momentum. However, industry experts think the rally in precious metals might sustain long-term. ithought Advisor's chief ideator, Shyam Shekhar, believes many investors were left confused, thinking crypto was a haven, resulting in a colossal blunder. Crypto prices are correcting, and investors are shifting to gold and silver. Shekhar believes the increasing geo-political risks will support the gold rate in 2023. Many countries want to stay away from the USD and increase their investment in gold. Movement in gold prices depends on what US Federal Reserve does to contain inflation. 

Gold rate in 2023 may see a rate hike if inflation continues to be above the long-term average and the US Fed stops raising interest rates. Samco Securities, head of market perspectives, Apurva Sheth, believes that the gold rate in 2023 will increase and reach Rs. 65,000/10 gm. 

Gold is Gold, and Silver is Silver

On the other hand, silver in 2023 might see some volatility. It is an industrial commodity and might experience pressure if the recession hampers sentiments. However, it will try to stay toe to toe with gold. The USD might weaken if market participants discount the Fed's possibility of quickly giving in to lower interest rate demands. Sheth believes there might be a significant rally in silver in 2023 if the DXY (dollar index) moves down. Silver prices have seen consolidation for a long time. Sheth believes silver will touch Rs. 1 lac in the following 30 months. He feels Rs. 75,000/kg will be a resistance point, and prices might consolidate around this point before moving upward. 

Anuj Gupta of IIFL Securities believes gold will touch Rs. 58,000-Rs. 60,000/10 gms, and silver will touch Rs. 75,000-Rs. 80,000/kg in CY2023. He said the expectation that the interest rates will rise this year and solid physical demand, along with China bouncing back from Covid, will result in an increase in precious metal prices. 

Read: Is buying gold in India a good investment?

While it might seem tempting to purchase precious metals, you should balance your asset allocation. You don't need to act if you have around ten percent of your portfolio allocated to gold. Refrain from overbuying any asset because of its rich history. Shekhar advises investors to allocate ten percent to gold and five percent to silver. ETFs, savings funds, and sovereign gold bonds are attractive options. 

What is Silver ETF? Should you invest?

It is essential to build a diversified portfolio, and purchasing precious metals is a step toward it. The previous three months could have been better if you had invested in gold and silver and not in different asset classes. Gold ETF has risen by 9.75%, and silver ETF by 22.55%. ETFs (exchange-traded funds) have been popular among investors to invest in gold and silver for a while now. While precious metals performed poorly in the recent past, the investing person shouldn't solely base their decision on the numbers. 

Read: Gold vs. Silver: Which is better for investment?

What Should You Expect in the Future?

The past two years have shown that investors want to buy low and book profits as precious metals gain momentum. However, industry experts think the rally in precious metals might sustain long-term. ithought Advisor's chief ideator, Shyam Shekhar, believes many investors were left confused, thinking crypto was a haven, resulting in a colossal blunder. Crypto prices are correcting, and investors are shifting to gold and silver. Shekhar believes the increasing geo-political risks will support the gold rate in 2023. Many countries want to stay away from the USD and increase their investment in gold. Movement in gold prices depends on what US Federal Reserve does to contain inflation. 

Gold rate in 2023 may see a rate hike if inflation continues to be above the long-term average and the US Fed stops raising interest rates. Samco Securities, head of market perspectives, Apurva Sheth, believes that the gold rate in 2023 will increase and reach Rs. 65,000/10 gm. 

Gold is Gold, and Silver is Silver

On the other hand, silver in 2023 might see some volatility. It is an industrial commodity and might experience pressure if the recession hampers sentiments. However, it will try to stay toe to toe with gold. The USD might weaken if market participants discount the Fed's possibility of quickly giving in to lower interest rate demands. Sheth believes there might be a significant rally in silver in 2023 if the DXY (dollar index) moves down. Silver prices have seen consolidation for a long time. Sheth believes silver will touch Rs. 1 lac in the following 30 months. He feels Rs. 75,000/kg will be a resistance point, and prices might consolidate around this point before moving upward. 

Anuj Gupta of IIFL Securities believes gold will touch Rs. 58,000-Rs. 60,000/10 gms, and silver will touch Rs. 75,000-Rs. 80,000/kg in CY2023. He said the expectation that the interest rates will rise this year and solid physical demand, along with China bouncing back from Covid, will result in an increase in precious metal prices. 

Read: Is buying gold in India a good investment?

While it might seem tempting to purchase precious metals, you should balance your asset allocation. You don't need to act if you have around ten percent of your portfolio allocated to gold. Refrain from overbuying any asset because of its rich history. Shekhar advises investors to allocate ten percent to gold and five percent to silver. ETFs, savings funds, and sovereign gold bonds are attractive options. 

What is Silver ETF? Should you invest?

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