Akshaya Tritiya is considered an auspicious day to buy and invest in gold for Indians. But since gold has not given any decent returns in the past two years, is it really worth buy gold at this time?
Indian gold market tracks the international market, and prices depend on the same. Physical buying and selling will have a little impact on the market.
Government has taken many measures to curb the gold imports and discourage any investment in physical gold. Check the gold rates in various cities here.
In Union Budget 2015, the Finance Minister announced a sovereign gold bond, with an interest rate.
Details from the scheme are awaited, but the objective was claer - to discourage investors from buying physical gold. Probably this bond would track gold prices, so it would give you an appreciation.
Now for those who love physical gold, the government would tap into the potential of having gold coins with the Ashoka Chakra on it.
This will discourage any imports of gold coin and will reduce the burden of trade deficit, current account deficit and hence keep the rupee strong.
Is Gold Investment really worth?
In early 2012 gold was trading at Rs 31,799 and is currently down to Rs 26,000 in 2015. Internationally gold today is at $1,204 an ounce.
Domestic prices of gold depend on how international prices of gold move and there are little hopes of an international rally in gold prices. In fact, there is a likelihood that the US Federal Reserve would hike rates in 2015, which would further put pressure on gold prices.
Gold prices in India are also influenced by the movement of the rupee against the dollar.
They say "trend is my friend" and rightly so. Between 2008 and 2012 gold rallied sharply as investors dumped equity on account of dismal global conditions and bought gold.
Now, as there is an economic receovery happening in places like the US, investors are dumping gold and buying equities.
Indian, equity market are reaching new highs now and then which in turn will impact the gold sentiment as investors would prefer to invest in equities rather than than gold during the bull run in the market.
The continued downtrend seen in international oil prices tend to weigh on other commodities as well.
A dip in oil prices will trigger the concern that inflation may remain low thus restricting the yellow metal as a hedge against inflation.
Gold in recent times has failed to stick to title as hedge against inflation and Safe haven metal. Gold can rise only if we have Geo-political tensions across the globe.
But thankfully issues like Iran nuclear deal and Middle East tensions are far lesser than they were. Good news is really bad news for gold.