2024 Lok Sabha election results: What could be the impact on gold and what should investors do

The 2024 Lok Sabha election results have sent ripples across the financial markets, with significant implications for various asset classes, including gold. 

Investors must understand if these changes can affect their investment portfolios. Gold prices, at present, on the MCX are hovering at Rs 72,000 per 10 grams.

Gold, often viewed as a safe-haven asset, reacts sensitively to political and economic uncertainty. Election outcomes can influence gold prices through changes in currency values, interest rates, and overall market confidence. 

Understanding these dynamics is essential for investors looking to navigate the post-election environment effectively, instilling a sense of security and confidence in their investment decisions.

Sachin Kothari, Director of Augmont Gold, said, "Lok Sabha elections results in India do not have a direct impact on gold prices because India is a gold price taker, and gold prices are derived from London fixing. Having said that, different political parties' attitudes towards looking at gold market policy in terms of duties and taxes are an important factor."

The BJP-led government has raised the gold import duty from 10% to 15% in the last 10 years to curb gold imports. The Congress-led government also raised the gold import duty in 2012 and 2013 from 0% to 10%. So it all depends on gold consumption, gold imports, current account deficits, and how gold policies are formed in India, not on political party win or lose.

Colin Shah, MD, Kama Jewelry, said, "While consumer demand largely remains unaffected due to election results, the industry hopes for continuity of governance as a key takeaway from the elections and looks forward to further seamless ease of doing business. Despite the hurdles, the Indian gems and jewellery sector has flourished in the last decade and looks forward to policy reforms that promote a favourable environment for the sector."

"From the investors’ perspective, gold has once again proven to be a robust hedge against economic weather fluctuations. As the stock market witnesses a blood bath owing to election results, yellow metal continues to hold the fort as it’s barely impacted by domestic factors," added Shah.