Gold prices down by 20% – Invest or not?

Gold seems to lose its sheen as it has fallen by 20% from the recent high which has taken place amid all the hopes of economic recovery post the reopening of businesses after the pandemic.

The experts feel that long-term investors have nothing to worry about and they should accumulate on dips. Money Commodity Exchange (MCX) Gold’s continuous contract has fallen from a high of Rs. 56,191 in August 2020 to a low of Rs. 44,150 in the first week of March 2021. Prices have fallen 21 percent.

Nish Bhatt, founder and chief executive of Millwood Kane International, said the yellow metal has been falling for the past few months and has lost more than 20% in value from the highs witnessed in August last year. “The fall in gold prices in the domestic market is in line with the international market prices due to the rising US treasury yields that make holding gold more expensive. The strengthening of the dollar also makes gold buying expensive. Heavy outflows from gold ETFs are also one of the reasons for the softness in gold prices,” Bhatt said, according to Mint. “We expect gold prices to remain sideways in the short-term as vaccination drive across the globe picks up the pace which will lead to full normalcy in economic activities. The expectation of a rise in inflation due to excess liquidity globally may help gold prices in the medium to long-term,” he added.

Perspective of Investment

Since the gold prices are going down for the past few weeks and it has become a tension for some banking purposes as they may rise their interests and people who are short-time investors especially in the matter of this yellow metal. But, it’s the perfect time to hop in for long-time investments in gold. It is so, because, right now the prices are going low, so it is quite easy to invest and wait for its returns.

“As far as long-term investment is concerned, it’s a good time to accumulate gold in tranches. We recommend digital gold from an investment perspective. For small investors, ETF is a good option, and for medium to long-term investors, the sovereign gold bond is good. It provides 2.5 percent interest and long-term capital gains are also tax-free on maturity. ” said Manoj Jain, Director (Head-Commodity & Currency Research), Prithvi Finmart.

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