Upstox Exclusive: Bajaj Finserv MF CEO explains why gold prices are rising

As gold continues its historic rally, Ganesh Mohan, the Chief Executive Officer (CEO) of Bajaj Finserv Asset Management Limited, provided insights into the surge of the yellow metal.

In an exclusive conversation with Upstox, Mohan emphasised the important role of gold as a counter-cyclical hedge, particularly in market volatility and uncertainty.

"Gold acts as a counter-cyclical hedge to equities. Current market conditions are a bit of an exception. By large, if you look at history, gold becomes a hedge in the portfolio that protects against inflation, currency risks as well as extreme scenarios like war. It also acts as an event risk hedge," he said,

‘Very likely a crisis in Chinese economy’

Mohan said that gold prices are rising primarily due to increased demand from the Chinese central bank and households.

"In the current scenario, what is really driving the gold prices is central bank buying, particularly in China. Interestingly in China, it is also household buying of gold. It indicates there is very likely a crisis in that economy, and people are looking towards alternatives to equities and other investment instruments, and typically going towards the stores of value. Gold acts as a really good store of value in that perspective," he remarked.

To watch full interview, CLICK HERE.

China's substantial gold purchases reflect turbulence in its economy amid the property sector crisis and issues in the banking sector. As investors seek to protect themselves from financial turmoil, gold emerges as a preferred asset.

Mohan concluded, "Until there is a clear visible end to the property issues and crisis in the banking sector, it (buying of gold) is quite possibly likely to continue".

Gold prices hit a record high of $2,450 an ounce in Asian trade on May 20 due to geopolitical tensions.