Gold prices have reached ₹1 lakh, creating uncertainty among investors. Experts suggest that investors should invest in gold according to their asset allocation.
Gold Price: The recent surge in gold prices has left investors pondering whether now is the right time to buy gold or book profits. Gold recently touched the ₹1 lakh mark, causing a stir in the market. However, experts say that it's difficult to predict the future direction of gold prices, but investors should make decisions based on their asset allocation strategy.
Reasons for the Rise in Gold Prices
1. Policy Uncertainty:
The biggest reason for the recent surge in gold is global policy uncertainty. US policy and the weakness of the dollar have supported gold prices. Experts believe that due to this uncertainty, investors are now considering gold as a safe investment option.
2. Increasing Investment Demand:
Vikram Dhawan of Nippon India Mutual Fund says that gold's performance will be good in 2025, as investors are now increasing their investments in exchange-traded funds (ETFs). Also, gold purchases by central banks are boosting prices.
3. Global Demand:
Countries like Russia, China, and India have increased the gold share in their foreign exchange reserves, which is supporting gold prices. Demand for jewelry from China and India constitutes a significant portion of global physical gold demand.
Negative Factors for Gold Prices
However, gold prices could also decline due to several factors. If trade wars are resolved or the dollar strengthens, the gold rally could be halted.
What Should Investors Do?
Before investing in gold, you should consider your asset allocation strategy. Experts advise that a 10-15% investment in gold is ideal. If you have low investments in gold, you should consider increasing your allocation. On the other hand, if your investment has increased due to the price surge, you can book profits and rebalance your portfolio.
Investing in Gold ETFs and Funds
Since the government has stopped issuing new tranches of Sovereign Gold Bonds, investors can now consider investing in Gold ETFs or Gold Funds. Investing in Gold ETFs eliminates storage concerns, and you can easily buy and sell them on the exchange. Furthermore, it avoids making charges associated with jewelry.
Benefits of Investing in Gold ETFs
No Purity Risk: Gold ETFs only invest in 995-purity gold, eliminating any quality concerns.
No Storage Issues: Investing in Gold ETFs eliminates the need to worry about gold storage.
Low Costs: Investing in Gold ETFs incurs no additional expenses, such as making charges for jewelry.
Is a Gold ETF the Right Investment?
When choosing a Gold ETF, you should consider some important points:
- Low Expense Ratio
- Low Tracking Error
- Good Liquidity
- Large Fund Size
Investment decisions should always be based on your financial goals and risk tolerance. If you want to invest in gold, a Gold ETF can be a good option.
