Indians have long bought gold during the festive season. With the festival of Diwali along with marriage season around the corner, leading jewellers and bankers hope that the gold sale in India will grow during the festive season.
Talking about the prices, gold prices have moved lower over the course of 2022, as many central banks across the globe have embarked on rate-hiking regimes in order to get control inflation.
Gold in India hit another new low, as the US dollar continued to make new highs on the back of the US Fed announcing one of the most aggressive rate hiking campaigns in decades.
Bhavik Patel, senior commodity/currency research analyst at TradeBulls Securities in an exclusive interview with News18.com talks about if investors should be investing in gold this festive season. If yes, then, what is the best way to do the same?
Gold prices have actually decreased for six months. Is it a good time to accumulate?
Patel said that it is a good time to accumulate but for the medium term. We are seeing a disparity between the physical gold market and the paper gold market.
“In Derivate or paper gold market, gold prices are under pressure due to the strong US dollar and Treasury yield while in the physical market, we have seen premiums increasing indicating supply tightness. A healthy appetite for gold is particularly visible in India and China as seen from robust buying during Dashera. For China, the nation can’t important enough gold to meet demand as premiums hit record levels. China’s gold import is at four year high. We believe the dip in the price is a good opportunity to buy gold as once the US Fed will slow down its rate hike cycle after the first quarter of 2023, we may see gold price climbing,” he added.
What’s the best way to buy gold right now?
“It depends on the requirement of the buyer. Our parents didn’t have the luxury to buy gold in any other format except physical but now with the addition of Gold bonds and ETFs, investors have different options to buy according to their requirements,” he said.
Further, Patel thinks if one is looking to invest for a gift, one can buy coins or jewellery but for investment purposes, it is recommended to invest in bonds or ETFs. We prefer bonds more as there are no management fees in bonds unlike ETFs and also bonds give yearly 2.5 per cent interest.
What are the factors you must keep in mind before investing?
Risk appetite and time duration should be kept in mind before investing in gold as it is not for short-term traders or speculators like in the equity market but gold is considered to be a safe haven instrument in case of hedging your portfolio or capital appreciation in long term, Patel adviced.
What are the different ways to buy gold?
“For the long term, we would advice buying via bonds or ETFs and for the short term, investors can buy via future or options through MCX. Short-term investors are more speculative in nature so investing through MCX is more appropriate for them,” he said.
Advice to those looking to sell old gold?
He explained, “We would advice those looking to sell old gold only if monetary requirement needs them to sell or if they are selling to replace and buy new jewellery. Old gold is like old wine, which will enhance its flavor as it ages. Similarly, the price of old gold will not be seen in the future as historically we have seen that prices have appreciated despite whatever circumstances the world goes from so keep holding your old gold unless circumstances require otherwise.”
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