Dhanteras 2024: As Diwali approaches, many may be contemplating the age-old tradition of purchasing gold, which carries both cultural and financial significance, particularly within the Indian household. Gold holds a symbolic value of prosperity and serves as a reliable investment that is often passed down through generations.
Gold has stood the test of time as a traditional investment choice.
Gold prices stood at Rs 60,282 per 10 gm, and have since risen to Rs 78,577 per 10 gm, according to Indian Bullion and Jewellers Association (IBJA) data, marking a significant increase of over 30% since Diwali 2023. In comparison, the Nifty 50 index has seen a growth of over 28% in stock prices.
In 2024, domestic gold prices have surged by over 23%, surpassing the performance of equities. The benchmark Sensex has recorded a gain of approximately 11% this year, with a notable increase of over 8% in the last six months.
Despite reaching record highs, the demand for gold remains strong this festive season and is projected to surpass Rs 80,000 per 10 grams before Diwali. Given the current global geopolitical and economic uncertainty, gold continues to be a dependable safe-haven asset. With its reputation as a popular investment option, gold offers a valuable hedge against inflation, especially during periods of economic instability, high inflation, or recession.
Gold’s performance in emerging markets
The DSP Mutual Fund Netra Report – October 2024 noted that gold has provided strong returns in local currencies within emerging markets, influenced by economic and political uncertainty that can lead to currency depreciation and higher gold prices.
The report emphasizes the importance of including gold in a portfolio as a means of mitigating volatility and managing risk, which can ultimately improve overall returns. Investors in emerging markets are advised to consider gold as a stabilising asset with growth potential during periods of uncertainty.
Should you invest in gold?
Ventura Securities analysts noted gold serves as an effective hedge against stock market volatility and global uncertainty, without necessarily aiming for exorbitant returns. It is valuable in diversifying investment portfolios, as historical data has demonstrated its ability to perform well during periods of low or negative equity returns.
“Gold is perennially used as a tactical 10-12% allocation in a portfolio, irrespective of the price levels of Gold. Based on one’s investment goals and liquidity needs, one could consider investing in gold ETFs, sovereign gold bonds, or physical gold (bars or coins), besides taking opportunity in the Gold Futures (Derivatives). Allocation adjustments (Silver & Gold) should be based on market conditions and personal risk tolerance to achieve long-term financial stability,” the brokerage noted.
“Given the current global environment, it remains a good time to invest in gold,” Santosh Joseph, CEO of Germinate Investor Services said.
Harsh Gahlaut, Co-founder and CEO, FinEdge, adds, “Dhanteras presents a great opportunity to buy gold, both in physical or electronic form based on age old tradition.”
“The bull run in gold is unlikely to fade away any time soon. The US Presidential election is just a fortnight away which is creating a lot of volatility in the global financial markets with gold gaining due to volatility in other asset classes. Also, all eyes are on whether the Federal Reserve cuts interest rates in its upcoming meeting on November 6 and 7, just after the US elections are over. If at all the Fed cuts rate at its upcoming meeting, then unexpectedly it will further impact the gold prices. Besides input for jewellery and asset class, gold is a safe haven for investors during times of uncertainty. It is a hedge for investors against any uncertainty and price volatility,” MP Ahammed, Chairman, Malabar Group, wrote in a column.
Will gold breach the Rs 1 lakh mark by 2025?
Gold is considered a top choice for long-term investment due to its ability to provide both security and reasonable returns for investors. Over the past five years, domestic gold prices have doubled, and in just over two decades, they have increased by ten times.
Given the current upward trend in gold prices, it is anticipated that the price of gold will surpass the Rs 1 lakh mark by the next Dhanteras and Diwali. With a nearly 30% surge in value since last November, experts predict that the precious metal could reach around Rs 1,03,000 per 10 grams by Diwali 2025.
As of October 23, 2024, the Indian Bullion and Jewellers Association (IBJA) reported the following gold rates: Fine Gold (999) 24-karat at Rs 78,703 per 10 grams and 22-karat gold at Rs 72,092 per 10 grams.
Read More: Gold investment: Will gold prices cross Rs 1 lakh mark by Diwali 2025? Should you invest