Gold prices in India fell sharply today (June 12, 2020) as global rates remain steady on equity market crash and gains in dollar index. On the MCX, gold contract for August deliver fell by 0.64% to Rs. 47111 per 10 gm. Gains in the dollar index render gold expensive for other currency holders.
Gold for some time now has been choppy owing to mixed factors. In India gold prices in line with international trend has been moving up and to move further higher it needs positive triggers as inferred by Kotak Securities.
In the international markets, spot gold was flat at $1,727.24 per ounce.
Why Invest In Gold In Current Sceanrio?
Back home, gold ETFs are being lapped up as fixed deposit rates have fallen to historic lows and financial advisers are advising clients to up their allocation to gold to 15-20% as against the earlier 5-10%.
Also, another argument which supports investment in gold and not in equities or debt instrument is the volatility risk in equity asset class as over the time due to economic crisis companies earnings growth are likely to suffer. And for debt, they for some time have faced credit risk as well as are unattractive.
In the medium to long term, as there is again painted a grim economic outlook and as the second wave of coronavirus infection is feared, gold prices may gain further.
So, investors with investible surplus can consider investing in gold can wait for corrective dips in gold price, which has an upside momentum.