Gold prices dips from its all time high rates

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New Delhi: Everyone wants to buy gold, but hearing its price makes one lose courage before purchasing. In the current time, gold prices have dropped significantly from their all-time highs, and that too within just one month. This might be the right time to buy gold. Let’s find out how much gold prices have decreased in the last month and why gold is a good investment option.

On the Multi Commodity Exchange (MCX), gold that expired in August touched an all-time high of ₹74,777 per 10 grams on May 20, 2024. On Friday, June 14, gold touched an intraday high of ₹71,947 per 10 grams. Within approximately one month from May 20 to June 15, 2024, gold prices have fallen by more than ₹2,800 per 10 grams.

One reason for the decline in gold prices is the results of the Federal Reserve’s meeting. The Federal Reserve has maintained its benchmark rate within the range of 5.25% to 5.50% for the sixth consecutive time. Initially, the Fed had announced three rate cuts in 2024. However, in its recent statement, it revised this to just one rate cut. Due to this change, the rate of the US dollar and treasury yields increased, which has resulted in a decline in gold prices.

Another reason for the decline in gold prices is China’s halt on gold purchases in May. The People’s Bank of China stopped buying gold, which had been ongoing for 18 months. According to the World Gold Council’s report, China increased its gold reserves by 27 tons during January-March 2024. India, China, and Turkey collectively purchased 76 tons of gold in three months.

Why is investing in gold a good option?

1. There are many benefits to investing in gold:

First, gold is considered a safe haven. During geopolitical turmoil, gold generally provides good returns. For example, during the Ukraine-Russia war, there was a significant rise in gold prices. Global tensions, turmoil, or economic crises tend to increase the demand for gold, thereby increasing its price.

2. Various investment options in gold:

Physical gold such as jewelry, coins, or bars are not considered ideal due to making charges, locker charges, risk of loss or theft, and purity issues. Apart from physical gold, there are other options for investing in gold, such as Gold ETFs, Sovereign Gold Bonds (SGBs), and digital gold. Sovereign Gold Bonds (SGBs) offer an additional annual interest rate of 2.5% above the market value of gold.

3. Portfolio diversification:

Diversifying your portfolio by including various asset classes like equity, debt, property, and gold reduces investment risk. When one asset underperforms, another may perform well. For example, during a decline in the equity market, gold prices are generally seen to rise. According to personal finance experts, gold investment should account for 10% of your portfolio.

4. Liquidity:

Another benefit of investing in gold is high liquidity. You can easily sell gold online or offline when needed. Selling assets like property during an urgent need for money is challenging, whereas gold can be sold easily. Gold ETFs and SGBs trade on stock exchanges, providing the freedom to sell them whenever required.

In conclusion, consider investing in gold, but not in the form of jewelry or coins. Instead, you can invest in Gold ETFs or Sovereign Gold Bonds (SGBs). The maturity period for Sovereign Gold Bonds is 8 years, during which you can earn profits from gold without paying any capital gains tax.