How have 22 karat gold rates in some Indian cities come down?

So what led to the decline?

Let’s start by understanding that Indian prices are linked to international prices and in international markets if they go down they also go down in India. Stronger-than-expected retail sales in the United States led to higher Treasury bill yields and a nearly 3% drop in international gold prices. The belief is that if the data continues to be strong, the US Fed would start cutting its bond buying program faster than expected. This meant that liquidity would start to come out of the system and this had an impact on gold prices.

Also, the belief is that if the data continues to be strong, we could see interest rates rise earlier than expected, which is not good news for gold. When interest rates rise, gold prices tend to fall and vice versa.

Key to gold’s immediate near-term movement in global markets would be the US Fed’s meeting scheduled for early next week. If the US Fed gave a timeline for tapering, we would see gold prices drop a little more. In short, gold is expected to experience volatility next week. It is always difficult to predict the two-way price movement for gold. It all depends on a multitude of factors, including news that emanates in the short to medium term.

How have gold ETFs performed in India? Should we buy gold now?

Gold ETF returns over the past year have been -10%. This means that it offers an investor the opportunity to invest in gold at a price 10% lower than last year. Now, if the global economic momentum picks up, gold is unlikely to generate good returns. Gold delivers returns when things go wrong, whether it’s economic chaos or covid.

It’s a safe haven, so in order for gold to really pay off some things have to go wrong, which is possible at times like this. Which we almost always advocate and tell readers to keep at least some of the money invested in gold, especially gold ETFs. It is very unwise to buy gold in physical form, due to margins, theft issues and storage costs. Gold ETFs track gold prices and are the best and safest way to invest. You can buy gold ETFs if you have a mat account and the gold ETFs mentioned above are suitable for investment. That said, ideally, one should have a diversified portfolio and gold should make up at least 10% of that investment to cover risks.