Akshay Tritiya 2020: Is COVID-19 pushing gold prices higher? Find out buying options

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Updated: Apr 26, 2020 10:58 AM

One can buy the Indian Gold Coin which is the first-ever national gold coin with 24 karat purity and 999 fineness.

 gold price in India, gold returns last 10 years india, gold price per gram, gold price per 10 gram, gold price today in India, gold bonds, gold etf, recession, inflation, Gold exchange-traded funds (ETF), Sovereign Gold Bonds (SGB)Buying digital gold is as good as buying physical gold it will get transferred to your home once the lockdown ends.

The recent interest in gold seems to have emerged largely on the back of worsening economic scenario across the world owing to the lockdown amidst the COVID-19 crisis. While uncertainties remain on the horizon with a trade war between the US and China likely to resume anytime soon, the demand for gold may continue to rise in the near future at least. Central banks across the world are doing their bit, but will the economy recover — be it U-shaped, V-shaped or even W-shaped — remains to be seen and until clarity emerges, gold may continue to shine.

But, how much more will the price move from the current levels and what is making the gold price go up? “Given the currency COVID 19 pandemic, the slowdown in global growth, interest rates being cut and liquidity being infused we believe that it’s a perfect match for gold prices to rally further. The slowdown in global growth along with geopolitical stress would continue to keep the prices afloat. Since we have seen such a good run up and liquidation in other assets classed, there could be bouts of correction in the near term. But the medium-term picture still looks very promising and expect gold on the Comex to above $2000 and domestic gold prices could target upwards of Rs.52000 over the next 12 months,” says Navneet Damani,  VP – Commodities Research, Motilal Oswal Financial Services. While the spot gold price in India is nearly Rs 41,000, the Gold Futures price is inching towards the Rs 50,000 mark.

It is widely believed that as equity markets fell globally, the investors looked to park money in safe-haven asset like gold. “Gold acts as a hedge against inflation, and historically its value has appreciated during uncertain times, war, pandemic, or an economic slowdown. Since Gold is an international commodity priced in US dollars any depreciation in Indian Rupee will lead to a further rise in prices of Gold. Value of the yellow metal has risen over 40 per cent in the last year alone,” says Nish Bhatt, Founder & CEO, Millwood Kane International.

Akshay Tritiya is one such special day when many individuals look forward to buying gold. This year in 2020, Akshay Tritiya is falling on Sunday 26 April. “While any direct sale from Jewellery shops is not possible, online platforms may see traction. Many digital wallets and gold outlets have come with products like online gold sales and Gold certificates,” says Bhatt.

One need not have to visit the jewellers but can buy gold coins online from any of the e-commerce websites such as Amazon, Paytm, Augmont or from jewellers such as Tanishq, Malabar etc. To make secure purchase ensure they carry the MMTC-PAMP mark which signifies the highest quality of gold. MMTC is a government undertaking and has a joint venture with Switzerland based bullion brand, PAMP SA. “People have shown more interest in digital gold buying owing to the novel Coronavirus pandemic. Gold coins and gold bars in the range of Rs 4-5,000 are more preferable to buyers,” informs Sachin Kothari, Director, Augmont.

Buying digital gold is as good as buying physical gold as the gold gets transferred to your home once the lockdown ends. “Akshay Tritiya is an auspicious occasion to buy gold and it is coming at a time when the macroeconomic backdrop of the world is looking very weak. Like the previous year, we continue to advise adding gold as a part of your portfolio and could see sustained returns just as we did in the past. With technology captivating the world we are promoting buying digital gold this Akshay Tritiya,” says Damani.

In addition, one can buy The Indian Gold Coin which is the first-ever national gold coin with 24 karat purity and 999 fineness. As an identification mark, it has the Ashoka Chakra on one side and Father of the nation, Mahatma Gandhi, on the other side. Currently, they are available in denominations of 5 grams, 10 grams and 20 grams. The Indian Gold coin carries advance counterfeit (Security) features and tamper-proof packaging. These are minted by the Security Printing and Minting Corporation of India Limited (SPMCIL) and hallmarked by the Bureau of Indian Standards (BIS). As on April 25, 2020, the price for 10-gram gold was Rs 51,796 excluding taxes. The Spot price, future price and the price of gold coins will vary for the same weight.

For an investor looking to invest in gold in paper-form, Sovereign gold bond (SGB) presents a simple and easier option. “ For somebody wanting to invest in gold through the paper route then the Sovereign gold bond is a very good option. One can look at the new bonds being launched or can also buy the existing ones that are traded on the exchange,” says Damani. SGBs which are already listed on stock exchanges may be bought only during the trading hours.

Gold exchange-traded funds (ETF) is another option to own gold in paper form. “As the Central Banks of developed nations have been on easing spree to fight the economic contraction, the fiat currencies are expected to face pressure in the near future. In such a scenario,  gold is likely to emerge as a safe-haven asset. One should have a part of the portfolio invested in Gold ETF as an insurance against the possible volatility expected in the global financial market. So, if this Akshay Tritiya you are looking to buy gold, Gold ETF would be a good option from a long-term perspective,” says Pankaj Bobade, Head – Fundamental research, Axis Securities.

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