It is a tradition to buy gold during the festive season, especially during Dhanteras, and many do buy gold either in the form of jewellery, coins or bars. But does it make sense to invest in gold this festive season?
Where Gold Prices Are Headed
In August 2023, gold experienced a subdued performance, initially dropping below $1,900 per ounce in global spot markets. Nevertheless, as August progressed, prices rebounded, surpassing the $1,940 mark. This rebound was attributed to a slowdown in the growth of jobs in the US, resulting in a higher unemployment rate and the belief that the US Federal Reserve would cease its interest rate hikes.
“Overall, we might continue to witness volatility in the current month, as persisting inflation concerns in the US due to elevated crude oil prices along with continued exchange traded fund (ETF) outflows since past few months to extend its correction towards $1,910-1,890 per ounce levels in International Spot markets (CMP $1,935 per ounce),” says Naveen Mathur, director - commodities & currencies, Anand Rathi Shares and Stock Brokers.
He says that as India is one of the largest consumers of physical gold, retail demand may well continue to provide support to the prices in the coming month, as the nation also approaches its peak wedding season in the last quarter of the year.
“Also with higher interest rates persisting as global central banks continue to fight inflation, economic conditions may start to deteriorate from the last quarter of 2023 onwards, leading to global slowdown concerns which could enhance safe haven appeal of gold in the first half of next year,” he says.
Should You Invest?
Prithviraj Kothari, managing director and CEO, RiddiSiddhi Bullions Limited (RSBL) says that current levels of Rs 59,000-60,000 are the best time to start accumulating gold this festive season for at least 10 per cent upside in the next one year.
In fact, it is a good idea to invest in gold irrespective of the current prices, he says.
“Investing In gold is more of a ritual and a very good ritual, I feel. When you invest in gold, you invest it for generations. So, there is no use of worrying about present price. We should focus more on habit,” says Anant Ladha, founder, Invest Aaj For Kal, a financial advisory firm.
Gold is an asset which despite any event, volatility will always be in demand. Its appeal is as much liquidity as its growth.
“It’s an asset which is an investment, but yet can be worn and it has so many variations. Anyone’s portfolio should have at least 10 per cent gold. Any corrections are just opportunities to invest,” says Shweta Jain, the founder of Investography, a financial planning firm.
The festive season is thus a good opportunity to invest in the precious metal.
