In India Gold is considered a precious item. Older People often say that Gold will help you in your bad times and it is true also. But Now Investment in Jewellery is not considered a good idea. Now there are so many investment options through you which you can invest in gold. These options are ETFs, Sovereign Gold Bond, Mutual funds. In recent two years, gold Gives return of around 20% CAGR. But in Recent days Price of Gold Fell so Sharply that Prices of Gold Declines more than 20% from their All-Time High. Here we will tell you why Gold Prices Fell and should you invest in gold or not.
Why Gold Price Falls so sharply?
1- Reduction of Import Duty
In Union Budget 2021-22 Indian Government Reduced Import Duty to 7.5% from 12% in Gold. It introduced the Cess of 2.5%. It makes a net reduction of 2.5%.
2- Increases in US Bond Yield
Bond Yield of US Bond has increased in Recent Times. Gold Prices is inversely Proportional to US Bond.
3- Gold Price Interest Rate can Increase
Economies across the world are recovering at a steady rate which leads the Central Banks of all the Countries to increase the interest rate. An increase in interest rate is crucial at this time because Rally Come sin Commodity Prices and this increase in commodity Prices brings inflation. To control this inflation interest rate needs to be increased.
4- Prices of Gold decrease in the Global Market.
The majority of Gold Requirement of India is fulfilled by Import and in Global Market Prices of Gold Decreases very sharply. This also helps in falling the gold price in India.
Should you do Investment in Gold Now
Yes, You Should do Investment in Gold Now. Reason for Investment in Gold Now –
1– Gold is the Only Commodity Whose Prices Fallen Sharply. Prices of Rest all Commodities Increases. You should Accumulate Gold whenever you find Dips in the Prices of Gold. Gold is the Commodity whose prices will increase in the long run.
2– Equity is trading at its All-time high and currently there are no chances of any Major Correction in the Equity Market. Banks also giving 5.5%-8.00% returns in their Investments Instruments such as FD, RD, etc. You have Limited Investment Options. This time is not correct for investment in Equity Market. You have Gold as an Investment Option.