Diwali 2024: Is Gold Still a Smart Investment for Your Festive Shopping? Expert Insights
Gold has always been considered a safe investment, especially by those who prefer traditional financial instruments. During Diwali, the demand for gold often spikes due to its cultural significance in India, where it is a symbol of prosperity and good fortune. Many believe that the festival season impacts the price of gold, but industry experts suggest that global economic factors play a more significant role in influencing its price.
Amit Goel, Co-Founder and Chief Global Strategist at Pace 360, shared his thoughts on gold’s performance over the past decade and offered predictions for 2024 during an interview with Reema Sharma of Zee News.
1. How Has Gold Performed Over the Last Decade?
Amit Goel points out that gold has experienced notable price volatility leading up to Diwali over the last ten years. However, he explains that this movement is not directly due to Diwali but instead influenced by global economic conditions. Over the past decade, the average return on gold in the month leading to Diwali has been only slightly positive. The significant increases in gold prices seen in recent years were largely due to other factors, such as a rise in U.S. bond yields and the strengthening of the U.S. dollar.
According to Goel, in each of the past three years, gold prices hit a low between August and October. The price rebound occurred primarily because of the sharp increase in bond yields and the dollar index during those months. These observations suggest that global economic indicators, rather than the Diwali festival, now play a more prominent role in driving gold prices.
2. Is Gold Still a Good Investment Compared to Other Options?
When it comes to the question of whether gold remains a strong investment, Goel emphasizes that it depends on various factors, including market conditions, inflation, and individual financial goals. Gold often acts as a hedge against inflation, meaning it tends to maintain or increase in value during periods of rising prices. This makes it a reliable option during economic uncertainty or times of high market volatility.
Gold also provides diversification benefits, as its value does not move in the same direction as stocks or bonds. By adding gold to an investment portfolio, investors can spread out risk and reduce potential losses. However, Goel also notes that other investments, like stocks, bonds, real estate, and cryptocurrencies, might offer higher returns depending on market conditions, though they carry different risks.
In general, Goel suggests that gold is better suited for long-term investors, as it tends to appreciate gradually over time. Stocks, on the other hand, may offer quicker gains but are more volatile. It ultimately comes down to an individual’s investment strategy and risk tolerance.
3. What is the Outlook for Gold This Fiscal Year?
Looking ahead, Goel believes that recent increases in gold prices are mainly due to global uncertainties and expectations of further interest rate cuts. On the domestic front, demand for physical gold is likely to increase as the Diwali and wedding season approach. These events traditionally drive a surge in gold purchases across India.
However, Goel also cautions that gold prices may decrease in the coming months. He explains that gold is currently “overheated” as an asset class, meaning its price has risen significantly in a short period. While there may be a short-term drop in prices, Goel predicts that gold will resume its upward trajectory in the long run, especially as global economic factors continue to support its role as a safe-haven investment.
Final Thoughts: Should You Buy Gold This Diwali?
For those considering buying gold this Diwali, Amit Goel’s insights provide valuable guidance. While gold remains a culturally significant purchase during the festival, the factors driving its price today are more global in nature. Events like changes in bond yields, currency values, and geopolitical risks have a larger influence on gold’s price than the Diwali season itself.
Still, gold continues to be an important asset for those looking to diversify their portfolios and protect their wealth during uncertain times. Its ability to retain value during inflation and economic turbulence makes it a reliable long-term investment. However, for investors seeking quicker returns, other assets like stocks or cryptocurrencies may offer better opportunities—albeit with more risk.
In the end, whether gold is a good investment depends on your personal financial goals and market outlook. As Diwali approaches, gold remains a popular and auspicious purchase, but it’s essential to keep an eye on broader global trends that could affect its future performance.
