Gold prices in India continued to fall sharply on January 15, 2023, hitting Rs 6,125 per gram by 3 pm. According to the Indian Bullion and Jewellers Association (IBJA), Gold 999 at the end of February 14, 2024, closed at Rs 61,590, which today dropped further to Rs 61,254.
In the national capital, gold prices had already dropped by Rs 750 yesterday to Rs 62,350 per 10 grams, amid weak global cues from the previous trade, when the precious metal had ended at Rs 63,100 per 10 grams. Silver also nose-dived Rs 1,400 yesterday to Rs 74,000 per kg, compared to its previous close of Rs 75,400 per kg.
"Gold dipped below $2,000 an ounce for the first time since December as a hotter-than-expected US inflation report diminished hopes that the Federal Reserve may soon pivot to monetary easing," IBJA said in its release.
Despite current drops, gold prices remain significantly higher than their yearly lows of around Rs 4,875 on October 6, 2023, and Rs 4,793 on March 7, 2023, when it had rebounded within two days. This has prompted many investors to consider investment in gold now, to lock in on yellow metal when its price has dipped to improve on the gains.
Global economic uncertainties and geopolitical tensions are likely to take gold prices to a new high of Rs 70,000 per 10 grams this year, industry body All India Gem and Jewellery Domestic Council (GJC) said earlier this week. "The yellow metal's appeal as a haven investment and a perfect hedge against inflation is likely to continue in 2024 as consumers face high commodity prices and elevated interest rates worldwide thus overheating financial markets," GJC chairman Saiyam Mehra said in a statement.
So investors looking to lock in on gold at a lower price have several options available, including Gold Exchange Traded Funds (ETFs) and Digital Gold. A subscription for SGB 2023-24 Series 4 is also ongoing till February 15, 2023, but the issue price is much higher because it was issued earlier this week before the latest dip of yesterday. So you won't be able to lock on the lower rates.
Sebi RIA Sriram Jayaraman said, “India Gold price is volatile. One can consider a small allocation to gold ETF or SGB, around 5 to 10 per cent of their portfolio.” As Jayaraman highlighted about volatility, IBJA data shows that the current price of gold, adjusted for inflation, is lower than the peaks it scaled back in 2011 and 2012, as well as in 1979 and 1980.
Gold ETFs saw a huge 9-fold jump in investment in January (Rs 657 crore) from the previous month. Each unit of a Gold ETF corresponds to one gram of physical gold, making it accessible to investors of all sizes. Investors can sell Gold ETFs on the stock exchange through a broker, using a demat and trading account.
Digital gold is the next option, where many companies, and platforms like mobile e-wallets, and broking firms offer it. Its return depends on the market price of physical gold but lacks regulatory oversight.
Shibu Kunjappy SEBI registered Investment advisor at Finprudence said, “One can always invest in gold up to 5 per cent of net worth as part of hedge and diversification without tracking the ups and downs in the gold price. Digital gold has the added advantage of a 2.5 per cent return and zero capital gains tax on maturity. Some physical gold is also fine to have the feel of it”
