Gold as an asset class, which remained under pressure for most part of 2022, may make a comeback in 2023 as economic slowdown globally turns investors risk-averse, according to Quantum Mutual Fund.

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The fund house believes that the yellow metal will be a "relevant asset class" next year given that it currently trades 10-15 percent below its all-time high levels and can benefit if risk-aversion gathers steam globally in response to slowing growth. "One can considering investing now to build their 15-20 percent exposure," the firm wrote in its year-ender for Gold.

Gold prices approached an all-time high of around $2,070 in March 2022 on the back of risk-aversion triggered by the Russia-Ukraine war. But later, as the geopolitical risk subsided and the US Federal Reserve initiated its tightening spree to combat sky-high inflation, prices faced heavy downside pressure.

Given all of this, Quantum AMC has listed three possible scenarios and its impact on Gold during the new year:

Scenario 1: Inflation Remains Elevated Amid Slowdown

In such a stagflationary environment, Gold will likely benefit. A scenario where the US Federal Reserve pivots to prioritise growth, it will also be bullish for Gold.

Scenario 2: Inflation Cools but Recessionary Conditions Remain

In such a scenario, the Fed may pivot to save the economy and a monetary easing kind of scenario can make way for bullishness in Gold.

Scenario 3: Fed Tightens Just Enough to Bring Inflation Down But Not Hurt Growth

Favourable economic conditions will result in outflows from the risk averse assets to more risk-on assets like equities.

For Indian gold investors, returns will be impacted by the trajectory of the Indian rupee that is likely to be under pressure. “The Fed is expected to hike further, albeit, at a slower pace, RBI policy cycle is near peaking, recession-induced risk aversion could drive foreign money home, and higher commodity prices threaten to push up the import bill.

"This will be positive for domestic gold prices,” Quantum AMC said.