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With gold prices hitting 8-month low, investors offered good hedging options

While the sharp fall in prices may discourage some investors, experts say that the correction could be a good opportunity to pick up gold assets on the cheap. 

Published: 22nd February 2021 10:50 AM  |   Last Updated: 22nd February 2021 10:50 AM   |  A+A-

gold, jewellery, ornaments

For representational purposes. (Photo | EPS)

By Express News Service

CHENNAI:  Indians have a strong penchant for buying gold but after the dazzling surge of early 2020, gold prices have tanked sharply beginning August 2020 losing nearly Rs 10,000 per 10 grams in value and going from over Rs 56,000 per 10 gram to just around Rs 46,439 currently. While the sharp fall in prices may discourage some investors, experts say that the correction could be a good opportunity to pick up gold assets on the cheap.

Investing in gold, analysts note, may still be a wise option since prices will gradually increase going forward. The risk of a second Covid wave on global economic recovery may guide also gold prices higher in the future. However, others expect a further fall in prices, since bond yields are continuing to rise, and say that gold prices may remain on their downward trajectory for longer than expected.

Amidst all this confusion, should you be investing in gold now? Most financial planners note that the opportunity to buy gold at low prices, at least for long-term investors, should not be missed. Gold, they note, offers a great option as a portfolio diversifier. For many investors, gold acts as a good hedge against inflation while it also helps to generate high risk adjusted returns.  Purchasing gold in a staggered manner when prices are low is a good strategy.

Experts also claim that their current reading of the situation is that prices of gold will rise eventually. “The global recovery in the post-Covid world and the low-interest scenario  may provide a boost to yellow metal prices,” said S Vijay Kumar, a Chennai-based wealth manager. But Kumar also expects gold prices to remain volatile, but the larger trend over the next few months is likely to be upward. Gold, experts add, also has the potential to store value over a long  period of time.



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