Gold has been historically seen as a secure and reliable asset. Every other household in India will have some quantity of gold and during times of economic uncertainty or inflation, gold retains its value, making it a preferred choice for wealth preservation by many investors. Gold is seen as a portable and reliable asset that can be easily liquidated during emergencies.
Buying gold is a part of India’s savings culture. It’s a tangible asset that families accumulate over generations, often in the form of jewellery or gold coins. This affection for asset continues to shape both personal finance decisions and societal norms across the country.
Understanding Market
It becomes essential to analyse historical and current trends in gold prices. Understand the factors influencing the increase, whether it’s due to economic conditions, geopolitical tensions, or market speculation. Evaluate the demand and supply trends. If there’s a surge in demand due to festive seasons, weddings, or global economic uncertainties, it may contribute to rising prices.
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Financial Goals
Align your decision with your financial objectives. Determine if buying gold fits within your investment strategy, whether it’s for wealth preservation, portfolio diversification, or long-term savings. Consider your investment timeline. If you’re planning for short-term gains, buying during a price surge might not be ideal. For long-term investors, fluctuations might matter less.
Buying Smaller Quantity
Assess the risk associated with buying at high prices. Consider potential future fluctuations that could affect the value of your investment. Implement a strategy like cost averaging. Instead of a lump-sum investment, consider buying in smaller amounts over time to average out the purchase price.
Digital Gold
Explore other investment options. If gold prices are soaring, consider diversifying your portfolio with different asset classes. You may consider gold-backed financial instruments like Gold ETFs or Sovereign Gold Bonds. These offer exposure to gold without the physical purchase and storage hassles.
Avoid Impulsive Decisions
Remember that timing the market perfectly is challenging. A rising market may continue its journey, but it could also face corrections. Be patient and avoid impulsive decisions. Keep an eye on economic indicators and global events that might impact gold prices. This knowledge can guide your decision-making process.
Adhil Shetty, CEO, Banbazaar.com, says, “Buying physical gold in the form of jewellery or bullion offers tangible possession but involves storage and safety concerns. It’s favoured for cultural reasons and emotional value. On the other hand, digital gold offer convenience and liquidity without physical possession. They suit investors seeking easier storage and accessibility, often allowing smaller investment amounts. The decision to buy during peaks rests on aligning investment goals with a long-term strategy.”
You may assess your purposes and preferred method of ownership between physical and digital gold before taking a decision. Gold prices keep fluctuating owing to multiple reasons. You must track the market, compare the prices, and buy when it suits your budget and requirements.