Since the record high price level of Rs. 56,200 per 10gm reached on August 7, 2020, gold prices in India have been volatile in tandem with movement in gold rates internationally. And after today's (September 2, 2020) softness in precious yellow metal's price which is owing to weakness in international rates, gold on the MCX quotes at Rs. 51280 per 10gm, which is a price decline of almost Rs. 5000 from record highs.
Outlook Going Forward For Gold Prices In India
As there is seen high volatility in international gold rates and at the same time the domestic currency has been showing signs of resilience against the US dollar (with rupee surging past 73 levels on Tuesday (September 1, 2020)), experts see gold prices in India to fall below Rs. 50000 per 10gm.
Worth mentioning here that rupee-dollar movement has an impact on gold rates in India as much of the gold is imported and in case the rupee depreciates against the dollar then gold rates in rupee terms appreciates or increases, and vice versa. And what you need to note here is change in rupee-dollar rate does not impact gold rates denominated in dollar terms.
A leading business magazine quotes Shantibhai Patel, President of the Gems and Jewellery Trade Council of India (GJTCI) who told Ahmedabad Mirror that he sees a further fall of "$20 to $30 in the gold prices". Further he suggests retail buyers to buy the precious yellow metal "in small quantity at intervals so as to take advantage of volatility". Also, experts opine investment in gold for retail buyers and small investors via Gold ETFs, which are tradable on stock exchanges and have the underlying as gold.
What Should Investors Do?
Considering the US Federal Reserve's latest monetary policy stance wherein it signals to maintain interest rates lower for longer, gold is likely to gain going forward. This is as low interest rates in the economy, pushes the safe-haven appeal of non-yielding bullion higher. And hence the current sharp correction in gold prices should be taken as a golden opportunity to take position in the precious yellow-metal.
"Buying gold at any price is profitable in the long run" and suggested that investors should "invest in gold in two ways: buy physical gold and invest in gold ETF for gains in the long term", Vaibhav Shah, Managing Director, Monarch Networth Capital Ltd told the publication house.