Source: Roz Dhan ("Yamini Tiwari")
Every one must invest for their future needs and requirements and the best option to do is to invest in gold. Gold is considered as a long-term generational asset, which should not be bought for short-term gains. They offer quality returns only after a few decades and so they are not considered as ideal short term investment. Indian household has a tendency of investing regularly in gold, but the spike in gold prices has made this very difficult.
Over the last 15 years, gold prices has risen from levels of around Rs 7000 per 10 grams to Rs 51000 per 10 grams as of today. Gold prices started their upward march since May 2019 and went as high as Rs 58000 per 10 grams in August. Since then there has been some cooling down in the prices sighting the return of normalcy in people's lives. The huge increase in price of gold in just few years, is the reason which makes it ideal for investment because it is a safe-haven investment.
credit: third party image referenceA rise in uncertainty and fear among the public is the biggest reason that leads to spike in prices of gold as the central bank of India increase the pace of their gold purchase. Geopolitical disruptions also influence the prices of gold in international markets. Reasons like US-China trade tensions and the India-China border stand-off added to the uncertainties. The pandemic and the huge disruptions in the economic activities led to fear among the people and increasing number of cases caused further rise in gold prices. While this is ample cause to worry investors, low interest rates and high inflation are other factors that would keep gold prices firm until a vaccine is in sight. But even these conditions has not stopped some investors from buying gold.
In August when information about the Russian vaccine spread, the gold prices saw decline and has been steady since then. Bus as the world is seeing another wave of pandemic and increasing number of fresh cases, there is growing uncertainties regarding economic activities. Because of this gold prices can again see a spike. Only a stable environment in future can bring the prices under control.
Despite everything gold is a right investment decision. Gold as an investment offers dual benefits of risk-reduction and wealth creation. Even when there is no economic crisis and geopolitical tensions, the precious metal can still offer decent returns in the long term.
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