Israel-Iran ceasefire: Is it right time to book profit in gold and invest in Nifty 50, Sensex-listed stocks?

Mint

17 hours ago

Israel-Iran ceasefire: In the past 6 to 12 months, gold has witnessed strong global allocations. This surge is primarily driven by rising global uncertainties, including the upcoming U.S. elections, escalating geopolitical tensions, unexpected tariff changes, and disruptions in international trade—such as recent debates surrounding rare earths and other essential commodities.
In periods marked by such macro uncertainties, global allocation often adopt a "safe haven" approach, pivoting their allocations towards assets like gold and the U.S. dollar. These assets act as stabilisers during turbulent times, said Ranju Rajan, Head of Managed Accounts, Axis Securities.
On Thursday, Gold prices edged slightly higher in the domestic futures market on Thursday morning, buoyed by ongoing uncertainty surrounding the US-India trade agreement and a rise in demand from spot markets. However, gains were limited due to investor caution ahead of the upcoming US payroll data.
At around 9:05 AM, MCX Gold August 5 contracts were trading 0.06% higher at ₹ 97,452 per 10 grams.
Since April 2024, Gold has delivered a remarkable return of over 46.06 per cent, significantly outperforming the Nifty 50, which gained nearly 13.03 per cent during the same period.
This outperformance in gold has been driven by heightened global tensions, war risks, and trade disruptions, which traditionally boost safe-haven demand.
' Yet, despite these geopolitical and macroeconomic headwinds, Nifty has shown resilience, suggesting underlying accumulation and continued investor interest in Indian equities,' said Kunal Kamble, Sr. Technical Research Analyst at Bonanza.
Kamble further said that on the monthly timeframe, gold has entered the overbought zone, which raises caution for fresh long entries at current levels.
' Gold typically trades ~10% above its 9EMA on a monthly scale. Currently, it is ~12.19% away from its 9EMA, suggesting a potential pullback or cooling-off phase. Showing signs of weakness as the bars are declining, hinting at an impending bearish crossover,' he added.
Vishnu Kant Upadhyay, AVP - Research & Advisory, Master Capital Services believes that the current market dynamics suggest a favorable environment for Indian equities, particularly Nifty 50 and Sensex-listed stocks, driven by strong domestic fundamentals, supportive RBI policies, expected robust Q1 FY26 earnings, and positive factors like good monsoons, FII inflows, easing crude oil prices, expectations of trade deal with U.S., and attractive valuations in banking and financial sectors. These make equities a compelling investment option.
' Gold remains a strong safe-haven asset due to central bank buying, anticipated U.S. rate cuts, a weaker dollar, and geopolitical tensions, though its rally may slow due to overstretched buying. Booking partial profits in gold could be prudent to capitalize on its recent run, while reallocating to Nifty 50 or Sensex stocks, especially in undervalued sectors like banking, to leverage the bullish equity outlook. Maintain some gold exposure for diversification and safety,' Upadhyay said.
On the contrary, Kunal Kamble of Bonanza says that Gold looks stretched at current levels and may undergo mean reversion or consolidation in the near term. Nifty and broader equities appear better positioned for upside, both technically and fundamentally, supported by improving macros and earnings growth.
' The rotation from defensive assets like gold to growth-oriented equities could drive equity outperformance in the coming year. Gold may offer value on retracements, but Nifty and Sensex-listed stocks present a stronger opportunity for the coming quarters. A tactical allocation shift could help capture the next leg of broader market outperformance,' Kamble said.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.