Gold Prices at Record High – Should Indians Buy This Festive Season?
We are witnessing investors asking important questions after the gold price in India reached record levels. Gold futures on the Multi-Commodity Exchange have recently soared past Rs 1,13,000 per 10 grams and reached Rs 1,13,253, an all-time high record. Gold prices have risen to $3,500 per ounce internationally, reflecting a strong global demand.
In the festive and wedding season scenario, Indian investors ask: With the wedding and festive season just around the corner, is this the time to invest in gold, or are current gold prices too risky?
This blog will cover the factors driving the price rally and evaluate the pros and cons of purchasing gold ahead of the approaching festive season.
Reasons Why Are Gold Prices Rising
Analysts believe the current increase in gold prices comes from both speculative buying and structural issues.
Here are the basic reasons we have noted:
Demand from Festival/Wedding Season
This festival season, from Navratri to Diwali, is historically the strongest season of the year for gold buying in India. Cultural sentiment, gift giving, and weddings all favour demand for gold. Due to the tight supply of gold and expected increase in demand, dealers have begun quoting premiums.
Expectations of the U.S. Fed Rate Cut
Global gold prices are being supported by monetary policy expectations. Investors are pricing in a 92% chance of a 25-basis-point interest rate cut by the U.S. Federal Reserve in September. Lower interest rates make non-yielding assets like gold more attractive.
Weakening U.S. Dollar
The U.S. The dollar has fallen by 9% in the past year, making it more affordable for international buyers. Since gold is priced in dollars globally, a weaker dollar will be supportive of higher gold prices.
4. Central Bank Buying
Countries like China and Russia continue to purchase gold in large quantities. They are moving away from dollars as reserves. Central banks are diversifying away from dollar reserves in an increasingly uncertain world, which is again generally supportive of high gold prices.
5. Geopolitical Uncertainty
Uncertainties from the Russia/Ukraine war and economic uncertainty has drawn many investors to safe-havens like gold, which during uncertain times, offer a hedge against volatility.
Should Indian Investors Buy Gold Now?
Although the price of gold has increased tremendously, investors need to consider the risks and benefits associated with buying gold at these higher levels.
Advantages of Buying Gold Now
Long-Term Growth Potential
In a scenario of the high prices of MCX Gold, analysts like Harshal Dasani of INVAsset PMS believe that it could rise to Rs120,000 for 10 grams over the next few months. This upward trend may be beneficial to those who are investing long-term.
Cultural Significance & Festive Demand
Gold is not only an investment in India but a part of the culture. Many people buy gold over the festive season as a symbol of wealth and prosperity. Even if the price is high, the emotional and cultural attachments for gold buying over the festive season could increase purchases irrespective of overall gold market pricing.
Diversification of Portfolio
For long term investors, gold serves to protect against inflation and stock market volatility. Gold’s unique value during times of economic distress is a strong tool to diversify an investment portfolio. Gold can be a good investment for investors who want to maintain stability in the face of stock market volatility.
Liquidity
Gold is still one of the most liquid assets. Whether you choose to purchase physical coins, bars, or jewellery, or invest in financial options like Gold ETFs or Sovereign Gold Bonds, you can quickly convert to cash when needed. This liquidity is attractive and benefits investors when investing in gold.
Risks of Purchasing Gold at High Prices
Price Corrections Are Probable
After a significant rally, gold is likely to experience a short-term correction in price. Investors with a longer-term perspective will be able to take advantage of any dips in price towards the support level around ₹1,00,000 per 10 grams. If prices fall after reaching record highs, investors who are looking for quick returns may be at risk.
Overpaying for Physical Gold
Gold Jewelry purchases during the holiday season are often accompanied by additional charges. This can increase the cost. Gold bars and coins are considered more valuable from an investment standpoint than jewelry. This is because the latter may include premiums due to its craftsmanship.
Old Jewelry Trade-In May Impact Demand
Exchange old jewelry rather than buying new gold at a high price. This could impact the overall purchase of gold during the holiday season and dampen demand. As seen in 2024, there is the possibility that compulsive buying could be restricted to small amounts, such as coins or gold petals, due to cultural factors.
What About Silver?
Although gold is the main topic of discussion this festive season, it is important for investors not to ignore silver. With its usage as both a precious and industrial metal, silver is quickly becoming a substitute that could offer even more value to investors.
Listed below are a few uses of silver that highlight its value above investment:
- Jewelry and ornaments
- Electrical conductors
- Solar panels
- Medical equipment
- Water purification
- Batteries
- Mirrors and glass coating
- Automobile electronics
- Photography
- Antibacterial applications in clothing
Conclusion
Gold’s record highs ahead of the festive season offer both opportunity and risk. Long-term investors will find it a liquid, stable asset that can be used as a hedge against inflation. Short-term investors should exercise caution, because volatility can occur after a rally. To make the most out of this precious metal, you need to take a strategic and well-informed approach.
It's important to select a transparent and trusted platform if you plan to buy or to sell gold in Delhi. If you want to unlock the value of your old jewelry, or invest in more intelligent options such as coins or bars, or reinvest in them, you should only deal with certified buyers.
Go to 24 Karat, a gold silver buyer in Delhi that provides instant and hassle-free gold selling. It's the best place to sell gold in Delhi because of its prices and no hidden cuts.
FAQs
Is gold still predicted to be expensive in the festive season?
Yes, prices could be high based on seasonal demands and external influences; however, the prices could fluctuate in the short term.
What calls for the risks of buying gold today?
Buying following a sharp rally can carry a short-term risk of correction, particularly for traders looking to make quick gains.
Does it make sense to invest in gold, despite the high price?
Gold is still a good investment for long-term investors. It can protect them from inflation and volatility in the market, even in a scenario where prices are higher.
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