Gold prices have fallen dramatically over the last few days. In fact, in the international market, gold fell as much as 5% and the precious metal is slated to fall a tad bit on Monday again. Let's take a look at 22 karats approximate gold price in some of the cities. These are quoted by local jewellers and in the top India cities.
Price for 22 karats gold for 10 grams
|June 19, 2021||June 10, 2021|
|Chennai gold prices||44,300||46150|
|Mumbai gold prices||46,950||48,100|
|Delhi gold prices||46,390||47,950|
|Bangalore gold prices||44,000||45,800|
|Hyderabad gold prices||44,300||46150|
|Kerala gold prices||44,000||45,800|
As can be seen, there has been a drop of almost Rs 1,800 per 10 grams in most cities for 22 karats gold since June 10. In line with spot gold rates at the local jewellers, even gold ETFs have seen their prices drop.
|52-week high||Current market price, June 19|
|ICICI Prudential Gold ETF||Rs 54.10 (Aug 2020)||Rs 41.98|
|HDFC MF Gold ETF||Rs 53.30 (July 2020)||Rs 42.08|
|Kotak||Rs 508 (Oct 2020)||Rs 412|
|UTI Gold ETF||Rs 53.75 (Aug 2020)||Rs 41.20|
|SBI Gold ETF||Rs 5139 (Aug 2020)||Rs 4209|
Why you should be tempted to buy Gold ETFs now?
The losses that we are seeing in Gold ETFs is nearly 20% from peak levels. At the moment, banks are offering an interest rate of 5% and stock market indices are at record highs. In fact, stocks have been crazily driven higher and may offer limited scope for appreciation.
At this time, it would be ideal to buy gold, given the more than 20% fall from peak levels. In fact, when trading opens on Monday, expect another half a per cent knock on gold ETFs. Thus gold and gold related instruments are likely to remain attractive.
Sovereign bond yields on an upswing
Globally, interest rates are headed higher and sovereign bond yields may rise. This could put some more pressure on gold. In the international markets, gold saw its worst ever decline in more than 1-year. In fact, over the last 1-year gold has now given negative returns. However, we do not advocate buying large quantities, but, buying systematically and on regular basis, given the fall of 20% from peak levels.
In fact, regular accumulation at these levels would help investors also diversify their holdings into gold. Another 1 to 2% fall in the precious metal is certainly bound to make it even more attractive, given that alternative investment options like bank deposits offer no returns and equities have already rallied very sharply.
We wish to reiterate that it makes very little sense to buy physical gold because of the margins in buying and selling gold. Apart from this it is a nuisance to store and also a problem if there is a theft. The best way to go is through Gold ETFs. These can be bought through your broker provided you have a demat account. Talk to your broker and he can assist you in buying the same.