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Is this the right time to buy gold, given the price correction?

Advisors bet on the metal for its safe-haven status and hedge against inflation

Dilip Kumar Jha  |  Mumbai 

Gold jewellery sees lacklustre sale

The corrections in both global and domestic offer an enormous opportunity for investors to accumulate in their portfolio this festive season before a possible rebound in its prices following strong fundamentals.

While the geo-political tensions between the United States and continue to escalate, with both sides launching verbal attacks and counter attacks on each other, gold's inherent nature being a safe haven bet and a hedge against continues to be a good investment avenue against all odds. The current price, therefore, is lucrative to park funds in gold, feel investment advisors.

"The current price correction offers an opportunity for investors and individual consumers to buy ahead of a possible rally based on strong fundamentals. In fact, the downside is very limited in Prices are expected to rebound from the current level," said Gnanasekhar Thiagarajan, Director, Commtrendz, a city-based equity trading and research analytics firm.

While the ongoing geo-political tensions between the United States and does not seem to be receding, mounting fears of rise in in India offer room for a sudden spurt in prices. The weak payroll data presented by the US government on Friday certifies analysts' belief for an increase in prices.

The US Labour Department on Friday reported that the economy lost 33,000 jobs in September while the unemployment rate fell to a new post-crisis low of 4.2 per cent.

This is the first negative print for headline payroll gains since September 2010 while the unemployment rate is now at its lowest level since February 2001. Friday's report also broke a 90-month streak of private sector job growth. Economists had expected that nonfarm payrolls would grow by 80,000 during the month with the unemployment rate expected to remain steady at 4.4 per cent.

After hitting a recent high of $1,350 an oz, slumped to trade at $1,265 an oz due to a strengthening dollar against major global currencies and traders' short-term pull back to take advantage of rallying equity Experts however believe that the decline is overdone.

Standard in Mumbai's popular here slumped by over 3 per cent from its recent peak of Rs 30,500 per 10 grams to trade currently at Rs 29,550 per 10 grams.

"Fundamentals for continued to remain supportive. So, the current price decline is in fact a good opportunity for investors to book before its price starts moving up," Jayant Manglik, President, Ltd.

Meanwhile, experts estimate depreciation in the rupee against the dollar due to increase in overall headline in India as anticipated by the in its latest quarterly monetary policy. Any depreciation in the rupee would make imported commodity costlier in local currency. Thus would become costlier going forward. Apart from global factors, prices remain elevated during the festival which is considered auspicious to buy a piece of

"Indian buyers were waiting for relaxation in the cash purchase limit under the goods and services tax (GST) which the government announced at Rs 50,000 under the Prevention of Money Laundering Act (PMLA). Since the council rescinded it's August notification, the cash purchase limit has gone back to its earlier level of Rs 200,000. Now, consumers would rush to buy So we advise our customers to buy now before its price shots up,"said Kumar Jain, Director, Umedmal Tilokichand Zaveri, a bullion dealer and jewellery retailer in here.

Today, offers twin benefits to accumulate in investment portfolio ahead of festival - price decline despite strong fundamentals and huge discounts in making charges by jewellers. Many jewellers have started offering a massive discount to the tune of upto 50 per cent to attract customers. has announced a fix making charge of Rs 199/gram for goldjewellery and nil for diamond jewellery.

"We were waiting for a positive news. With the council exempted extension on jewellery, we see a revival in consumer sentiment. Now jewellery sale would jump significantly this festive season," said Jain.

Meanwhile, yielded negative returns so far this Samvat year with its price on 2016 was hovering at Rs 29,680 per 10 grams as against its current price of Rs 29,550.

First Published: Sat, October 07 2017. 19:02 IST
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