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Time To Buy Gold Is Now, As Prices Dip Sharply

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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, 2021June 10, 2021
Chennai gold prices44,30046150
Mumbai gold prices46,95048,100
Delhi gold prices46,39047,950
Bangalore gold prices44,00045,800
Hyderabad gold prices44,30046150
Kerala gold prices44,00045,800

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 highCurrent market price, June 19
ICICI Prudential Gold ETFRs 54.10 (Aug 2020)Rs 41.98
HDFC MF Gold ETFRs 53.30 (July 2020)Rs 42.08
KotakRs 508 (Oct 2020)Rs 412
UTI Gold ETFRs 53.75 (Aug 2020)Rs 41.20
SBI Gold ETFRs 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.

Time To Buy Gold Is Now, As Prices Dip 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.

Read more about: gold gold etf
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