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Where are gold prices headed?

The best time to invest in gold would have been about a year ago and it could go either way from here on, opines Dhirendra Kumar

Where are gold prices headed?
- Vinod Miryala

To be honest, I don't know. One year ago, it would have been very profitable to know where it was headed. From here on, the bets are off because it can go up a little further or it can go down substantially. So, look at your risk-return equation here. The best time to invest in gold would have been a year ago if at all you had succeeded in timing it. It could have been even at the beginning of this year from where it could have gone up by about 40 per cent.

I think gold is no longer a stable asset class the way historically it has been. Owing to financial innovation, many investors are able to buy it in the paper form and hence, people buy it aggressively. Also, they sell it very aggressively if the market stabilises or the outlook for the market stabilises. Considering where it is today, the risk-return equation is tilted against gold at this level. But there is a possibility that it could still go up.

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