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Gold was the top-performing asset in 2020 and had the highest value of Rs 56,200 by August 2020. As countries like Russia, the UK, the USA, and Canada explored and created COVID-19 vaccines, it brought new rays of hope for normalcy to return, the value of gold started losing its shine.
By November mid, vaccine developers announced positive results of Phase 3 trials which led to a hard hit on the price of 24-karat gold; it had fallen by 14.29% to close at Rs 48,169 per 10 grams. The value of gold has further declined to reach Rs 46,285 per 10 gram selling gold price today.
Will the gold prices continue falling?
Today, the gold-selling price has retracted by 17.64% from Rs 56,200 per 10 grams during August to exactly Rs 48,169 today. There is a sense of victory in the world market concerning COVID-19 vaccines. Everyone believes that the risk and uncertainty surround the coronavirus has assuaged. It is expected for normalcy to return soon.
Although there is a new strain of COVID-19 on the rise, today’s gold selling price remains low in countries like the UK, USA, Russia, and India. The reason being the release of effective vaccines, and due to the vaccination drives taking place across the world, common concerns have been alleviated. However, things may change quickly soon.
Should you stay invested despite the low selling gold price today?
Gold traders who entered the market during the COVID-19 lockdown and made quick gains may worry. However, long-term investors who use gold as a generational asset may be happy. The value of gold has risen over the past few decades. The gold-selling price today may be at its low for now, but we must remember that there is always demand because of the limited supply of gold. The demand from both individuals and central banks may cause gold prices to hit high again.
Uncertainty has historically been the most crucial reason behind the spike in gold prices as central banks increase gold purchases. If uncertain events like COVID-19 propelled gold prices beyond Rs 56,000 in August 2020 from Rs 40,000 in January 2020, one should note that the pandemic isn’t over yet, and there is no certainty that such a global disaster will not return.
Also, widespread access to a vaccine is still a far-distant goal. A return to normalcy will take more time, and the severe damage to businesses and individuals has caused mounting government debts and lower interest rates. Hence, rising inflation.
Governments will continue with their monetary inflation policy, credit expansion, and government spending to deal with the collapse of the economy and ensure recovery. It brings with it years of low-interest rates. Given the gold’s potential to store value in times of negative real interest rates, it would be a great strategy to continue investing in gold and generate risk-adjusted returns.
One must also not forget that India and the US’s relationship may be great, but tension still exists on the Indo-China border. The boycott of Chinese products in India may further worsen the relationship between these two neighbouring countries.
Why should you invest in gold?
The important factor in gold investment is the timing of entry and exit. It is usually not recommended because that doesn’t happen all the time. However, a better approach is to follow the asset allocation strategy. You can accumulate gold by investing a certain percentage of your portfolio.
If you invest in the selling today gold rate in bangalore, which is at Rs 46,169 per 10 grams in a disciplined manner will ensure better returns as and when the gold prices rise again. There is a high possibility that the interest rates will remain low, resulting in high inflation levels. Hence, it is an open window of a gold investment opportunity due to negative real interest rates.
Conclusion
The news of the COVID-19 vaccination has propelled the today gold rate in ahmedabad at 17.64% from Rs 56,200 in August 2020. As of now, a one gram gold rate in India costs Rs 4,628. However, the prices are expected to increase in the long run. It is perhaps a better time to take advantage of the existing lower interest rates, geopolitical risks, and overvalued stock markets to invest in gold.
