Gold prices expected to rise during festive season, is it time to invest?

As the vibrant festive season approaches, marked by celebrations such as Raksha Bandhan, Ganesh Chaturthi, Dussehra, and Diwali, the resonance of gold within the cultural tapestry of India intensifies. This period is not only a time for cherished traditions but also an opportune moment to explore avenues of investment that resonate with our evolving digital landscape.

With the rupee showing signs of weakness against the dollar and the festive season in India just around the corner, investors should consider capitalizing on the positive trend in gold. The robust festive demand in India is poised to maintain stable gold prices. For investors seeking to accumulate gold, a strategic entry point lies between the current levels of Rs 58,500 and Rs 57,000.

Given the ongoing trend of global central banks acquiring gold and the uncertain global economic landscape, gold prices are anticipated to remain steady, if not rise significantly due to the impact of a stronger dollar and elevated interest rates.

However, the trajectory could swiftly change. The moment the Federal Reserve hints at a potential pause in its rate hikes or even the possibility of an interest rate cut, gold prices are likely to surge.

Talking to Bizz Buzz, Jateen Trivedi, VP Research Analyst at LKP Securities, said, “Taking these factors into account, investors can reasonably project an optimistic outlook for gold, foreseeing price levels in the range of Rs 61000 to Rs 62000 by the close of the year. It's a strategic move that aligns with both the weakening rupee and the traditional buoyancy of the festive season in India.”

The allure of gold investment has always held a special place in Indian hearts, particularly during the festive season when families partake in the age-old tradition of purchasing gold to honour religious and social customs. This year, the demand for gold investment has witnessed an undeniable surge, magnifying the appeal of this precious metal as an investment avenue.

Anil Kumar Bhansali, Head, Treasury, Finrex, said, “Gold is a good buy for longer term but wait for good levels as if Fed is hawkish then gold may fall a bit more.”

The rise of digital gold investments: At the nexus of this changing investment landscape stands the rise of digital gold investments, a novel financial avenue catalyzed by the advancements in digital technology. Wealthtech platforms across the spectrum are registering remarkable increases in digital gold investments, especially in the lead-up to these festive celebrations. Sqrrl by CASHe, a pioneering financial wellness platform, is also witnessing a substantial uptick in digital gold investments.

Hareesh V, Head of Commodities at Geojit Financial Services, said, "The ongoing geopolitical and economic uncertainties like higher inflation, China economic jitters, and the pandemic-related economic distortions amid the Russia-Ukraine war continue to offer support to the safe haven status of gold in the immediate run. Hopes of a demand recovery from India may also contribute to the trend. However, it is unlikely for major rallies due to uncertainties over US rate hikes and the performance of US assets.”

Investors can cautiously increase their exposure to gold as prices corrected about 5 per cent from their all-time highs and the key demand season is nearing, which may increase the demand and thus the price of the metal. In addition, a weak Indian Rupee also offers additional support to the yellow metal.