Gold prices have fallen and fallen quiet a bit in India. In the month of November, gold prices at one stage were trading at Rs 27,700 per 10 grams, but, have since fallen to Rs 26,750 per 10 grams in the city of Bangalore (as on Dec 11).
Most cities are seeing a drop in the gold prices and this is good news for buyers. At these levels, gold may not be a bad bet. Let us examine some of the reasons for the same.
Limited other investment options
Those who wanted to make some quick money over a year or so, gold could be a good option. Banks are offering you interest rates of 6.5 per cent, shares have already rallied a great deal this year and real estate is going nowhere. The best bet now would be gold, which has fallen a good 4 per cent in the last one month or so. This makes it a good bet in times of declining prices.
A hedge against times of trouble
When there is economic chaos or geo-political tensions, gold prices will rally. At the moment, developments in the North Korean Peninsula do not look very interesting. Gold could be a perfect hedge, if any war like situation were to erupt on the Korean Peninsula.
The US Fed is expected to meet this week in which it is likely to raise interest rates. We anticipate a further reaction to gold prices, which should allow investors to buy into the precious metal. If you get gold at Rs 27,500 per 10 grams in Mumbai and at levels of Rs 26,000 in Bangalore, it may not be a bad time to accumulate the metal on decline.