There is no specific time to invest in gold. Before investing you can keep track of its price fluctuations to purchase it at a comparatively lower price. Besides, gold is an integral part of our Indian culture and is used during weddings and various festivals as an auspicious gift. Due to these reasons, gold prices can vary between different states of the country. For example, gold rate in Tamil Nadu will not be the same as that of West Bengal.
What are the Main Reasons You Should Invest in Gold?
Being a long term asset, gold investments can bring you higher returns in the long run. However, this is not the only reason you should invest in gold. Some of the main reasons for which you should consider buying and investing in gold are as follows:
- Profitable Investment
Purchasing gold is the best form of investment as it requires no loans or other financial help to acquire. You can purchase any amount of gold as per your capability and soon form your own small treasure. On top of this, if you are solely interested in investing, there is no requirement of purchasing physical gold, as you can deal in it digitally.
- Zero Paperwork
Investing in gold involves some of the easiest steps in comparison to all other forms of investment. It even requires no paperwork and you can simply visit your nearby gold jewellery shop to purchase the desired ornament. Moreover, it gives all the benefits of investment and you can also pay in EMIs.
- Minimum to No Depreciation
The price of gold usually does not experience depreciation. However, you may have noticed news headlines mentioning their price drop, which in reality is equal to negligible. Hence, the price of gold which you bought today will witness more increase in the future, and you will earn heavy returns simultaneously.
- Wedding and Festive Purposes
As already mentioned gold is the most adorned metal in Indian culture and is used both as an auspicious gift and for accessorising purposes. For this, the gold prices in different states of India fluctuate, as their festive seasons are not the same. Hence, gold rate in Kolkata during a particular month of the year might not be the same as that of Chennai.
What are the Factors Affecting the Price of Gold?
After knowing the reasons you should invest in gold, you must also know the factors that affect its price. It is important to grab some of the best deals while purchasing gold. Here, the factors affecting gold rates that you should consider before investing are as follows:
- Interest Rate Fluctuations
Being a fixed income instrument, the rate of gold is inversely related to the interest rates prevailing in the market. Hence, with a decrease in the interest rates, demand for gold increases with an increase in price and vice versa.
- Demand and Supply
The price of gold also depends on its future demand and supply. If there is a high chance of the demand to rise in future, purchase it now as the prices will increase simultaneously later. The opposite happens when prices fall.
- Mining Activities
If the gold mining activities during a year are more or adequate enough to serve the demand, then the price of gold will not rise. However, if these mining activities fail to supply gold as per the market demand, then prices tend to increase.
- Economic Inflation
It is very risky to invest in certain asset classes during inflation due to a fall in money value. During this time, investing in gold can give you higher returns. Hence, the demand for gold increases along with its price and vice versa.
- Gold Jewellery Market
During wedding seasons the demand for gold in the jewellery market increases and so does its price. However, India being rich in cultural diversity, does not witness weddings throughout the country only during a particular time of the year. Therefore, you will observe the gold rate of Tamil Nadu during a particular month is different from that of Punjab.
- International Markets
Heavy amounts of gold are being imported from international markets in India. Therefore, any changes in import duties, exchange rates, etc., can affect the rates of gold. Sometimes you may see these prices have increased to the extreme point or vice versa.
- Currency Value Changes
While importing gold from international countries, it is usually traded in USD, which later gets converted to INR. Any changes in the value of USD to INR can result in a rise or fall in the price of gold.
- Government Reserves
The Government of India also has the authority to purchase and sell gold via the Reserve Bank of India. This gold with the central government gets deposited in their gold reserves. The price of gold can vary depending on the amount purchased or sold and its rate.
Now that you know everything about why and when you invest in gold or the factors affecting its price, the steps of buying it should become easier for you. Moreover, if you just want to invest without holding it as an asset, you can do it online without purchasing physical gold. However, make sure to undergo complete market research and check the rates properly to get the best deals. For instance, do not go with the gold rate in Tamil Nadu if you want to purchase it from West Bengal since prices vary across states and cities.
