FAQ | Gold Price Volatility: Is It a Good Time To Invest in Gold and Silver?
Gold prices dipped to a 7-month low in India on 22 September. Is this a sign to invest in the sought-after metal?
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The price of gold in India fell to a near seven-month low on Thursday, 22 September, on the back of the US Federal Reserve increasing interest rates.
Gold futures (the prediction for future prices) as of 5 October dipped to ₹49,321 on the Multi Commodity Exchange (MCX), down 0.25 percent, while silver prices fell 0.4 percent to ₹57,059 per kg.
So, is this a good time to buy gold? Should you wait for the price to drop further? The Quint spoke to Anuj Gupta, vice-president, Research, Commodity, and Currency at IIFL Securities, to help you understand better.
How much does gold cost right now?
Internationally, gold's price has fallen to the lowest it's been in a year and a half. In the US, gold's current price is $1656 per ounce.
In the domestic market, though, the price hasn't fallen at the same rate, because the rupee has depreciated to an all-time new low.
Both the rupee and the dollar index have been hurt because of rising military tensions between Russia and Ukraine after the former ordered a partial mobilisation of its forces in Ukraine.
Why is the price of gold falling?
The price drop is a result of the US Federal Reserve increasing interest rates by 75 basis points.
This leads to a drop in liquidity. People's investments are shifting towards the dollar. The dollar is currently trading at a 20-year high, while the Indian rupee is at an all-time low.
Is it a good time to buy gold now?
The international exchange rate for gold on 22 September was USD 1,668 per ounce.
"If the price falls to around 1,600 internationally, I would advise investing in it at that point, because domestic prices would come to around Rs.48,000 per 10 grams then," says Anuj Gupta, vice-president, Research, Commodity, and Currency at IIFL Securities.
"From an investor's point of view, it would be wise to wait and watch the prices, and not go in on any large gold investments at the moment," he adds.
Gupta adds that gold is a good long-term investment. The investment is likely to pay off in the next year or two, but in the coming months, the price of gold will likely see a further decline.
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