Will real estate and bonds face the heat now?
With investors staring at negative returns in gold, the question now is which asset class will be the next to be affected. Real estate is one sector that has provided a double digit return in the last five-to-six year period. The market has been expecting price correction in this market. However, the same has not yet happened. Will real estate be next asset class to see price volatility? It is difficult to predict, but the same cannot be ruled out as it has not gone through a price correction for the last few years.
Another market that may see upheaval is the bond markets. Many gold loan companies and NBFCs have raised a huge amount from the public to finance gold loans. If the asset prices of gold drops further, these companies may face liquidity issues resulting in default. Investors need to assess these risks before investing in these assets.