Gold prices have seen a sharp decline of Rs 2,000 per 10 gm last week. According to experts, this decline is a result of an interest rate rise in the US, tighter monetary policy, and strengthening of the US dollar.
Amid this dramatic dip in prices, many individuals must be considering investing in yellow metal. However, it's crucial to understand the investment strategy before actually digging into it.
So, how should one invest in gold now?
According to Adhil, Shetty, CEO, BankBazaar, the current fall in gold rates is temporary, and one can expect course correction in the coming weeks. However, Shetty points out that there is a fair amount of volatility in the market and investing in gold for speculating may not be a wise idea.
“It should only be done for long term,” he stresses.
Ketan Kothari, Director of Augmont seconds Shetty’s views and adds that individuals should use the opportunity of this dip in prices and start accumulating gold in the range of Rs 46,000/10 gm to Rs 47,000/ 10 gm.
Going forward, Kothari believes that prices could head higher towards Rs 50,000/10 again in the next 3-4 months due to high inflation in the US and festive demand from India.
How much gold should one buy?
Talking about asset allocation, Shetty of BankBazaar tells that gold should be only a small part of one's portfolio and should not exceed 5-10 percent of the total investments.
Where should one invest?
While traditionally gold was exchanged or bought in a physical form and it still is, there are certain problems attached to handling physical gold such as storage or chances of theft, purity concerns, etc. Given the problems associated with physical gold, one could invest in gold ETFs, digital gold, or sovereign gold bonds instead.
“Gold ETFs are easy to trade on exchanges and come in dematerialised form. Sovereign gold bonds, which are issued by RBI, accompanies an assured interest of 2.5 percent per annum while gold deposit schemes can be considered as a fixed deposit in gold,” says Harsh Jain, Co-founder, and COO, Groww.
Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.
(Edited by : Aditi Gautam)