Prices for gold fell on Thursday to its lowest within the past year as anxiety over sluggish growth spooked it. To $2,562.61 an ounce, gold fell on November 15 with it being the steepest weekly drop in more than three years. US gold futures also fell by 0.2% to $2,567.10. The over 4% weekly decline has indicated that it is not smooth-sailing for the precious metal. This has made many ask—the question is should you invest in gold in India amid such fluctuations?
In Delhi, 10 gm of 24-carat gold traded down to Rs 75,813 Friday after falling by Rs 1,200 from the previous day. The plunge has been consistent since it traded at Rs 74,620 just yesterday. The 22-carat variant also fell by an equal margin and traded at Rs 68,402 per 10 grams. But even with the downward trend, many investors are still keen to put in their money into Indian gold as the long-term demand will remain strong.
The prime reason for the gold price weakening is the strong US dollar, which would rally further following the positive inflation data and the monetary signals of the Fed.
Invest in gold in India or wait? What the experts say?
Analysts note that the rising interest rate as well as the cautious stand of the Fed regarding any cuts have added to the pressure on gold. However, gold continues to be the first choice for investment diversification, and many are rushing to find ways to invest in gold in India at these low prices.
The new alternative assets, bitcoins for example, now trade around $93,000. Bitcoin was recently under a lot of interest from investors which serves to distract from more traditional safe haven assets. Rahul Kalantri, Vice President of Commodities at Mehta Equities, however believes that the dollar strength is not going to persist for longer-term investors looking to invest in gold in India, as demand comes into the market driven by wedding and festive seasons.
Vikas Singh, MD and CEO of MMTC-PAMP, noted: “Reduced import duties and cultural demand are still factors supporting gold buying in India. If anything, one should seek to capitalise on this setback rather than being overwhelmed by it. For all those wondering whether they should invest in gold in India or not, the good news is that gold remains a robust asset class that works well in challenging economic times.”
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