If you are one of those who would be celebrating Dhanteras and the Diwali festival later this month by buying gold, the falling gold prices may come as a welcome trend. After rising incessantly from the beginning of the year, gold prices have softened of late. In fact, the lower trend may come as a good time for anyone who is looking to buy gold as an investment as the long term trend of the yellow metal looks to be positive.
According to prices by the India Bullion and Jeweller’s Association (IBJA) at Rs 30,170 on October 6 against Rs 31,660 on August 18.
Experts say gold prices are becoming attractive. “Retail scenario is buzzing with discounts and promotions! It’s the right time to make the purchase, big diamonds, gold jewellery or even coins. Furthermore, monsoons have been good this year, we are expecting good sales this Dhanteras and Diwali” Saurabh Gadgil- Chairman & Managing Director, PNG Jewellers and Director, Indian Bullion Jewellers Association talking about the current gold and sales scenario.
On Dhanteras, which precedes Diwali, it is considered auspicious to buy gold, silver and new utensils. “Dhanteras, is definitely one of the most auspicious days of the year, where we record thumping sales. People have faith that shopping on this day will add to their prosperity (dhan), and so, they prefer buying big ticket items like Gold coins and bars in large quantity,” Gadgil said. While Dhanteras is celebrated mostly in North and West India, in the South it is called Dhanalakshmi Puja.
Gold prices are likely to move upwards as it would remaim a preferred investment amid prevalent geopolitical tension and uncertainties. “The rates are attractive now to invest in gold considering the political scenario of the impending India-Pakistan situation, USA elections and Middle East tensions,” Gadgil said.
Even the World Gold Council in its market analysis titled ‘Failed monetary policies lift gold’ hinted at global tensions buoying gold. It also said that gold purcahses by ETFs remained strong. “Amid rising uncertainty in global financial markets after Brexit and the recent slowdown in emerging market economies, the Bank of Japan (BoJ) announced an expansion of its quantitative easing policies,” the analysis mentioned.
On the other hand, gold ETFs have seen record inflows. “Gold backed ETFs have seen record inflows, adding 630 tonnes ($25 billion) year-to-date (as of July 31, 2016), and bringing their collective global gold holdings to 2,240 tonnes,” the analysis pointed out.