Gold ETFs post negative return, but better stocks

GOLD ETFs gave an average negative return of 2.56 per cent in January. However, they outperformed the Nifty and Sensex during the month.

After moving above Rs 18,000 per 10 gm in the first week of December, gold prices have largely been following a downward trend. In December too, the returns were negative at 7.27 per cent.

Against an average monthly price of Rs 16,370 in December, the prices were bettered in January to Rs 16,734.

However, during the year-long period from January 2009 to January 2010, gold ETFs gave positive returns of 20 per cent.

In the three-month period from November to January, Kotak Gold gave a return of 1.89 per cent, while Reliance Gold gave 1.87 per cent. "Even at 2.56 per cent, gold has outperformed Nifty funds, which have given a negative return of 6.13 per cent. Sensex funds gave a negative return of 6.34 per cent in January," said Krishnan Sitaraman, director of Crisil Fund Services.

There has not been much activity in gold in January as the US dollar was moving up. We had advised investors to book profit when prices hovered around $1220 an ounce. Since the first week of December, investors have been retaining their positions without much selling or fresh buying.

However, in February prices may move upward and fresh buying is recommended at $1080 level. In a couple of weeks, gold is expected to gain $35 and move up to $1100. But we advise taking short positions as after it breaks $1073, gold may move