Gold prices have fallen significantly from the August highs.
Gold prices have fallen 16 percent from their highest level of August 2020 so far. Experts believe that the price of gold is set to increase in 2021. Also Gold brings diversity in your investment portfolio. Let us know what the experts have to say about investment in gold?
- Last Updated:February 24, 2021, 7:46 AM IS
‘US dollar and gold behave opposite each other’
There is also a large section of investors, who want to know whether it will be safe to invest in gold at current prices. Can they take advantage of this opportunity and earn strong profits. On this, the National Secretary of the India Bullion and Jewelers Association (IBJA) Surendra Mehta says that there have been many reasons for the improvement in gold prices in recent times. The biggest reason of these is the dollar being stronger against other big currencies. According to him, the US dollar and gold behave unlike each other. If the demand for the dollar increases, then gold prices will come under pressure. At the same time, gold prices have also improved due to the increase in American Bonds Yield.
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Mehta says that apart from the strength of the dollar, now people are also looking for more risky options for bigger profits. These include options like equity and cryptocurrency. However, I think this decline in gold prices is temporary and short-lived. Hence, investors can earn strong profits in the long term by investing in gold at current prices. In contrast, there is little scope for the equity boom to last long. So, getting out soon after earning a profit can be a better option. If there is a fall in the stock markets, then people will turn to gold and its prices will increase rapidly. According to him, gold can touch a high of $ 1960 an ounce within 3 to 4 months, which will be up about $ 150 from now.
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Gold prices down due to increase in US benchmark bond yield
Chirag Mehta, senior fund manager at Quantum Mutual Fund, says the biggest reason for the fall in gold prices is the rise in the US Benchmark Bond Yield. The benchmark bond yield has shocked the market. In August last year, where it was at a low level of 0.6 percent, now it has more than doubled to 1.37 percent. Due to this, there has been some fall in the prices of gold. However, I do not think this situation will continue for long. If there is a further increase in the yield, the Central Bank will have to intervene in a short time. This will support gold again. Experts believe that the price of gold is set to increase in 2021. Also, 7-10 per cent of your gold brings a diversified portfolio.