Gold Prices On The Rise: How Should You Invest ?

Gold prices, after reaching a record high of $2195.15 per ounce last week in International Spot markets, were corrected as Inflation concerns re-emerged in the US. The producer price index (PPI) readings, along with the consumer price index released earlier this week signaled that inflation remained sticky which led gold bulls to remain cautious for a while. However, the longer-term outlook for the year remains bullish considering rate cuts to happen in the latter half of the year augmenting a safe haven appeal for the yellow metal. According to experts, gold prices are currently receiving a boost from two main factors: macroeconomic scenario and geopolitical unrest. Amid global uncertainties, gold is like a ray of stability and opportunity. Gold’s inherent features act as a shield against inflation, currency changes, and geopolitical tensions, making it a wise choice for investors seeking to protect their wealth and achieve financial freedom. 

Whether you should buy gold during a price increase hinges on market awareness and risk management. You must assess your investment goals and explore other options. If you are buying gold for special occasions like weddings or festivals, you might go for it. However, if it’s mainly for investment purposes, you might wait for the price to stabilize. 

Here are some ways you could invest in gold: 

“In such a scenario, one can consider investing in gold coins, or bars, in terms of physical investment, or can even consider investing in ETF regularly. Gold ETFs, as the name suggests, are listed and traded on stock exchanges where a demat account is required to invest in these schemes, unlike regular mutual fund schemes. Hence Gold ETFs are safe investments that are governed by tight regulations,” Naveen Mathur, director - commodities & currencies, Anand Rathi Shares and Stock Brokers said. 

Other investment options for a retail investor also include investing in Sovereign Gold Bonds (SGBS) & gold savings schemes offered by Jewellers regularly. SGBs that are preferable over a longer horizon and come with a taxation benefit, as compared to investing in Physical gold which requires higher capital investment & also attracts tax. The disadvantages of investing in SGB include a long maturity period of eight years, which some investors find discouraging. Also, the possibility of capital loss remains if the redemption price is lower than the purchase price.

“Gold savings schemes offered by jewellers allow customers to invest in gold through monthly installments. They typically run for 11 months, with the 12th installment being free. Customers pay a fixed amount every month. When the scheme ends, they can use the total saved amount to buy gold jewelry or similar items. Some schemes may also provide discounts on jewellery-making charges,” Mathur added.