An important update has come from Quant Mutual Fund, one of India's top-performing mutual fund houses. They have issued a statement that can be seen as either a warning or an opportunity, depending on your perspective. According to their analysis, gold prices could fall by 12% to 15% over the next two months in dollar terms.
This should be a warning sign for those who recently invested in gold expecting a continuous upward trend. On the other hand, for those waiting for a dip to enter the market, this could be the opportunity they’ve been looking for.
Quant Mutual Fund believes that gold has likely peaked in the short term, and hence a correction is expected. However, they are not making a guaranteed prediction—just highlighting the potential for a price drop. Despite this near-term caution, they remain constructive on gold from a medium and long-term investment point of view.
They emphasized again the importance of allocating a meaningful portion of one’s portfolio to precious metals, such as gold and silver. While most retail investors limit themselves to these two, the broader category includes other lesser-known metals too.
Interestingly, the fund also shared insights into other asset classes. For instance, June is traditionally considered a bullish month for crude oil, and while the downside may already be over, any upside from here—about 10% to 12%—should not come as a surprise.
In terms of high-risk assets, they mentioned that global investors who are comfortable with high-risk bets may consider cryptocurrencies like Bitcoin. However, due to tightening global liquidity conditions, cryptocurrencies may face short-term pressure. Nevertheless, the fund sees a potential pullback rally in this space.
The broader message was one of caution regarding equity markets globally. According to Quant, the medium-term outlook for equities is weak, and the coming months may pose significant challenges. In particular, the US equity market seems to be in a consolidation phase. They clarified, however, that we are not in bear market territory yet, and signs of a full-blown recession are not evident. The global liquidity remains strong for now, which is a key buffer against a sharp downturn.
Quant also shed light on their own portfolio positioning. Most of their cash has been allocated to mid-cap and small-cap stocks, although their overall allocation still remains tilted toward large-cap companies. This suggests a balanced approach with a preference for stability amidst ongoing market uncertainty.
One notable observation from their monthly release is the breakdown in traditional correlations between various asset classes. The historical relationships between gold, currencies, bond yields, real interest rates, and equities appear to be weakening. This is making it more difficult for investors and central banks to rely on conventional models for decision-making.
In conclusion, the key takeaway from Quant’s update is the expected dip in gold prices in the short term, followed by a constructive outlook in the longer term. For those who missed out on the previous rally, the anticipated correction might offer a fresh opportunity to invest.
Disclaimer:
The information in this article is for educational and informational purposes only and should not be considered as financial or investment advice. Please consult with a certified financial advisor before making any investment decisions. The views mentioned are based on Quant Mutual Fund's market commentary and are not guaranteed outcomes.
