Gold price falling: Is this the right time to invest?

After reaching the lifetime high of over Rs 57,000 per 10 gram August last year, the price of gold has started declining recently. The decline in the gold price has generated investors' interest in the precious metal. Against this backdrop, ETV Bharat spoke to Satish Kantheti, Joint Managing Director at Zen Securities Ltd, to find out - Is this the right time to invest in gold. Read on for the answer.

Hyderabad: Gold has been one of the most favourite investment options for Indian households for centuries. Despite the growing number of investment avenues like stocks, debts, real estate, etc the attractiveness of gold is still intact, especially during the downturn in the economy. No doubt, the current economic crisis has not dented the investors interest in gold, the majority of the investors are not clear about the right time to invest.

To clear this doubt, ETV Bharat spoke to market expert Satish Kantheti. Here are the details.

What decides the gold price?

According to Satish Kantheti, Joint Managing Director at Zen Securities Ltd, the value of the US dollar in the international market and the price of gold share inverse relation. In simple terms, if the dollar value rises, the gold prices dip and if the dollar value declines, the price of gold goes up. “The recent decline in gold price was triggered by the decision of the US Federal Reserve,” Satish Kantheti told ETV Bharat.

Last week, the US Federal Reserve decided to increase the key policy rate in the coming months. The decision fuelled the demand for dollars in the global market, which, in turn, impacted the gold prices. According to the news agency PTI, the value of the Indian rupee has declined by nearly 100 paise recently. The value of the Indian rupee against one US dollar came down from 72.89 on June 8 to 73.86 on June 18, said PTI reports.

The rise in dollar value (or the fall in rupee value) led to a fall in gold prices. For instance, gold was sold at Rs 46,460 per 10 gram on June 18 in the national capital against Rs 48,892 per 10 gram on July 1.

Buy on dips

According to Saitsh, since the price of gold is expected to decline further over the short term period on the back of rising dollar price, investors who have a long term perspective should start investing in gold on further dips. “Investors who have very little exposure to gold may start buying on further dips in gold prices, while those who have considerable investments can wait for further correction,” said Satish.