 "Akshaya Tritiya 2024: Should you buy gold today? What experts suggest")
Gold investment in India has deep cultural roots, with people often purchasing gold during festivals and auspicious occasions. Akshaya Tritiya is one such occasion where buying gold is believed to bring prosperity and good luck. Gold prices saw a slight decrease on Friday. The price of 24 carat gold is Rs 7,215 per gram, down by Re 1. The price of 22 carat gold is Rs 6,614 per gram.
Gold prices in major cities on Akshaya Tritiya
Delhi: Rs 72,300/10 grams
Chennai: Rs 72,150/10 grams
Mumbai: Rs 72,150/10 grams
Kolkata: Rs 72,150/10 grams
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Ahmedabad: Rs 72,200/10 grams
Pune: Rs 72,150/10 grams
Hyderabad: Rs 72,150/10 grams
Bengaluru: Rs 72,150/10 grams
Jaipur: Rs 72,300/10 grams
Lucknow: Rs 72,300/10 grams
Factors such as the current gold price, manufacturing charges, and the inclusion of diamonds or other gemstones influence the final cost of gold jewellery.
Why do people buy gold?
In India, gold is often bought for religious or emotional reasons rather than purely for investment. Purchasing gold offers confidence in wealth protection. It is also viewed as a safeguard against inflation and financial risks.
Should you buy gold this Akshaya Tritiya?
"Investing during Akshaya Tritiya is essentially a religious practice and should not be mixed with investing in gold," says Shashank Pal, Chief Business Officer, Prabhudas Lilladher, Wealth Management.
According to Vinnaayak Mehta, Founder of The Infinity Group, "Traditionally, gold has served as a safe haven for investors, providing a hedge against financial risks. The cultural significance of Akshaya Tritiya prompts many households to purchase gold, driven by emotional value rather than purely investment motives. However, it's essential to assess market conditions, investment goals, and personal financial circumstances before deciding to invest in gold this Akshaya Tritiya."
Downsides of buying gold at peak prices
— Geopolitical tensions may keep gold prices high.
— US dollar volatility impacts gold prices.
— The timing of US Fed rate cuts could influence gold prices.
— Gold prices may remain high till the end of the year
Shashank Pal explains, "Predicting exact numbers is challenging due to ongoing geopolitical tensions, which are unlikely to improve soon. The situation will remain uncertain, and gold prices will stay high. As prices rise, the attractiveness of buying gold decreases. The US dollar's volatility also affects gold prices. Once the US Federal Reserve cuts rates and the dollar stabilises, gold prices may decrease. Until then, expect gold prices to remain elevated."
Considerations when purchasing gold
"There are various ways to invest in gold, such as jewellery, biscuits, physical gold, ETFs, and sovereign gold bonds," Pal says. "Risks include purity and storage. When buying physical gold, purity (whether 18, 22, or 24 carats) and certification reliability are crucial. Storage is also a significant challenge. For non-physical gold, consider entry loads, holding periods, and maturity. For example, sovereign bonds require an 8-year holding period with a 2.5% annual yield, which is relatively low. Match your investment to your needs, whether protection or growth."
— Forms of gold investments: Jewellery, biscuits, physical gold, ETFs, sovereign gold bonds.
— Risks with physical gold include purity and storage.
— Non-physical gold involves understanding entry loads, holding periods, and maturity.
Comparing gold to other precious metals
Gold holds several advantages over other precious metals as an investment. It is widely recognised as both an investment asset and a currency. Additionally, gold boasts higher liquidity, with active trading on exchanges worldwide. These factors give gold a competitive edge, making it a preferred choice for many investors seeking to diversify their portfolios and hedge against market uncertainties.
— Match investment type to your needs; long-term perspective diminishes the importance of entry points.
Diversifying beyond gold
— "Never put all your eggs in one basket" applies to gold investments too.
Vinnaayak Mehta advises, "New investors should consider diversifying their portfolios beyond gold. While gold can be a valuable component of an investment portfolio, relying solely on it is not advisable. Diversification across various asset classes, such as stocks, bonds, real estate, and alternative investments, can spread risk and enhance returns over the long term. By diversifying, investors can mitigate market fluctuations and capitalise on growth opportunities across different sectors."
Impact of economic conditions on gold investments
Key points
— Geopolitical tensions significantly impact gold investments.
— "Gold prices may rise by the end of 2024 due to geopolitical instability," says Vinnaayak Mehta.
— Consider a "buy on dip" strategy and systematic investment methods.
— Conduct thorough research and consult financial experts before making gold investment decisions.
"Current economic conditions, particularly geopolitical tensions, can significantly impact gold investments," Mehta notes. "Historically, gold has been favoured as a safe haven asset during geopolitical instability. Presently, with tensions escalating between Russia and Ukraine, and Iran and Israel, gold prices are expected to rise by the end of 2024, potentially reaching $2600 to $2700 per ounce.
"Investors might consider a 'buy on dip' strategy, using systematic investment methods to capitalise on price fluctuations. By accumulating gold during market downturns, investors can take advantage of lower prices and position themselves for potential gains. However, thorough research, monitoring economic indicators, and consulting with financial experts are essential for making informed decisions about gold investments in these conditions."