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Gold prices are headed for new highs; What an investor should do?

The yellow metal-gold stirred new highs by breaking all records of its past amid coronavirus. Even when the world is struggling for better economy and rising cases of COVID-19, gold has proved itself to be a safe-haven. Some tips for investors.

Sarabjeet Kaur Sarabjeet Kaur
New Delhi Updated on: August 14, 2020 17:26 IST
Gold, Gold prices, coronavirus, gold investments
Image Source : FILE PHOTO

The price of gold is continuously rising and has touched the levels of more than 55,000 levels.

The yellow metal-gold stirred new highs by breaking all records of its past amid coronavirus. Even when the world is struggling for better economy and rising cases of COVID-19, gold has proved itself to be a safe-haven. The price of gold is continuously rising and has touched the levels of more than 55,000 levels. Although there is some downtrend from last one weak but still gold is a safe-haven for investors in this global uncertainty. Many experts from big financial firms like BofA Securities, Goldman Sachs believe that gold may touch Rs 82,000 levels per 10 grams by the end of the year 2021. In the international market, gold rates may touch the rally to $3,000 per Ounce by the end of the year 2021, which in Indian rates is equal to around Rs 82,000 per 10 grams.

Why gold price rising?

The global economy collapsed all because of COVID-19 making investors worried for their investment options. Investors started to look after safe mode of investment because of too many uncertainties in the global economy and share market. As gold is always known for a safe-haven investment, so investors began to invest money in gold and increased the price of gold by their investment sentiment in gold. The trend will no doubt continue for long.

Future Target for Gold and Expert Views:

We can see a lot of volatility in the share markets due to mixed global cues and sentiments. So, for the investors who want to invest in gold for long term is still a chance according to experts. One can also buy like SIP as well every month and add gold into their portfolio.

Gnanasekar Thiagarajan, CEO, Commtrendz.com says, "It is quite likely that we see Rs 65,000 or so by November 14th, which also coincides with the US election uncertainty and the dollar could further weaken by then. So, yes, broadly it looks like this up-trend could be sustained till around Diwali. The stimulus package and its inflationary effect are expected again to take gold prices much higher from recent highs.

Aasif Iqbal, Head-Research, Escort Securities says, "One should buy gold for long term with a target of Rs 70,000. The reason behind the target are mainly three. One is the Geo-Political tension between US-China is making it safe-haven investment. So, Central Banks accumulating Gold. The second is, due to pandemic Central Bankers infused huge amount of liquidity into the system that is triggering price rise of yellow metal and the third is falling Dollar against major currency is also helping Gold to gain."

So, one should buy as a safe investment and add gold into their portfolio.

What an investor should do?

As there is always a mantra while buying any good fundamental asset class is to buy on every dips. This is what gold investors should do right now. "If the investor has a short-term horizon, then all risk management tools like stop losses, money management and leveraging should be done judiciously while trading the bullion futures. But a long-term investor need not worry, as both the fundamental and technical factors point to more upside for now and can continue to keep adding to positions on every dip." opines Thiagarajan.

Experts also believe that in the next 6 to 1-year horizon due to financial market uncertainty and RBIs monetary policy rates gold demand will probably rise and attract investors in the commodity market. Including India-China reforms will add up the long-term demand of gold in the market.

Gold can give you adjusted inflation return and a good source of return. So, investment in gold is a good idea. But, don’t add more than 10 per cent of gold in your portfolio.

If you are gold lover then buy gold bonds rather than physical gold bonds. You can also save tax by investing in sovereign gold bonds. Gold ETFs are also another good option to invest in Gold.

At present gold is around Rs 51,260 for 10 grams. If we talk about the average annual gold performance return, then yellow metal is almost 14.5 per cent up till date in the year 2020.

Before investing or trading in gold, do take an advise from your financial expert and make some research about the yellow metal fundamentally and technically both before investing. Always set some goal and objectives before investing in any of the asset classes.

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