After a roller-coaster ride that was 2020, we all have finally entered 2021. We know not what the new year will bring for all of us, but we can always plan to stay fit and invest money to receive good returns. Hence, we are here with a topic to help you with the latter; you would have to work hard for the fitness part.
This post will explore the possibility of buying gold jewellery, coins, bars, or digital gold solely for investment purpose. While there is never any hurry to jump on the investment bandwagon because others are doing so, we suggest that you research, discuss, read, and ask as many questions as you come across before finalizing your decision to invest in the yellow metal. For the beginners, we will keep this article to the point, easy to understand, and brief so that all of you can grasp the investment in gold concept easily without much confusion. Alongside, we will also discuss the past performance of gold, including Diwali and Dhanteras 2020 to give you an idea about how the yellow metal has been performing and how it might in the future.
Gold Prices in the Last Six Months
Ever since corona was declared a pandemic, gold prices have seen immense fluctuations. In the last six months, the yellow gold has made several ups and downs due to numerous global changes regarding oil price fluctuations, corona vaccine, and others. Even the high demand for portfolio diversification in the economic fall by many businesses and individuals has impacted gold price.
In the last half a year, gold has increased and decreased in its price frequently. At the beginning of July, the yellow metal was priced at around 4260 INR per gram. As the month neared its end, the same value had 4760 INR. However, price decline had also been recorded as the year neared its end. In the middle of August 2020, gold witnessed a fall and landed at 4500 INR. At the start of September, the price was almost the same after a brief period of fluctuation in August 2020. Even October saw the yellow metal dangle between 4400 to 4600 before it improved briefly during the festive time.
As Dhanteras and Diwali approached, Indian market geared to welcome the buyers and record the most sales in the day. While the shoppers were more than expected due to economic downfall, the sales were still way behind compared to 2019. In November, the yellow metal was bought as per the auspicious dates at nearly 4514 INR.
As we enter 2021, gold has undergone a drastic price cut and sits at around 4400 INR in the first week. Remember that all the prices here are for 22k gold and may vary slightly depending on different locations.
Gold’s Performance in Diwali and Dhanteras 2020
Investors buy gold as a hedge against inflation. But in India, there is yet another reason to shop for yellow metal: auspicious beginnings. Dhanteras and Diwali are the days when festivities in India begin and go for almost a week. These days are considered auspicious to bring home wealth (read gold) and prosperity. Yellow metal plays a vital role in bringing stability to a middle-income and low-income household in India.
During Diwali and Dhanteras 2020, gold price remained quite flat for two days to three days. 22k gold was priced at 46,443 INR with 3% GST, and 24K 10 gram was 50,702 INR plus GST. The low or moderate price range of gold during such rush days are attributed to the softening of gold prices in the prior days and lockdown. Even rose gold and white gold prices were quite steady during these days without seeing much fluctuations.
Expected Rise in Gold Price Per Gram in 2021
In the last decade, gold has provided Indians with a return of approximately 159%, which is way higher than the return received by Nifty 50 or Sensex 30. While the former has given a return of 93%, the latter has provided its investors with nearly the same return percentage. This does make gold a good investment option for a longer time period.
In 2021, the yellow metal is expected to remain flat for starting few months. However, there could be news of increased prices as corona vaccine makes its debut in the world. Investors might turn toward gold for better liquidation. Additionally, it is a good opportunity to buy gold as the upward trend is likely to continue in the new year due to the low-interest-rate environment and excess liquidity flushing in the financial system.
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