Pros and Cons of Today's Gold Price in India at ₹80,000

Pros and Cons of Today's Gold Price in India at ₹80,000

Written by Gagandeep Arora || Printed on - Date - 23 October 2024

Gold has always held a special place in the hearts of Indians, not just as a precious metal but also as a symbol of wealth and security. Recently, on October 23, 2024, gold prices surged to an all time high, touching ₹80,000 per 10 grams. This significant price increase has created ripples across the financial markets and among consumers. Whether you're an investor, a jeweler, or someone looking to buy gold for personal use, the sharp rise in gold prices has various implications. In this blog, we will discuss the pros and cons of the current gold price in India at ₹80,000.

Pros of Gold Price at ₹80,000

 1. Excellent Opportunity for Investors

Gold is often considered a safe haven asset, especially during times of economic uncertainty or market volatility. For those who had invested in gold when prices were lower, the current price surge offers an excellent opportunity to realize substantial profits.

 High Returns on Investment: If you bought gold when the prices were around ₹50,000 or ₹60,000 per 10 grams, you’re now looking at a significant appreciation. Gold has consistently proven to be a reliable store of value, and this recent surge further solidifies its reputation.

Safe Haven During Uncertainty: With ongoing global uncertainties, inflationary pressures, and geopolitical tensions, investors are flocking to gold. As a result, the demand and price of gold are expected to remain strong in the near future.

 2. Hedge Against Inflation

Gold has historically been an effective hedge against inflation. When the value of currency drops due to rising inflation, gold typically retains or increases its value, protecting the purchasing power of those who own it.

 Preserving Wealth: Amidst rising prices of essential goods and services, holding gold can help individuals protect their wealth from the devaluation of currency. When inflation eats into the value of paper currency, gold acts as a safeguard.

3. Rising Global Demand

The global demand for gold continues to rise, especially from central banks, which are increasing their gold reserves. This high demand will likely sustain or even drive prices further up in the coming months, making it an attractive investment option.

 Demand From Emerging Markets: India and China remain the largest consumers of gold, and with upcoming festivals and weddings, the demand is expected to rise, potentially pushing the price even higher.

 4. Liquid Asset

Gold is one of the most liquid assets, meaning you can easily convert it into cash almost anywhere in the world. The high prices make it a favorable time to sell your gold if you need liquidity.

 Immediate Cash Availability: If you have gold in physical form, such as jewelry or coins, the current prices offer a great opportunity to sell and get a quick return on your investment.

Cons of Gold Price at ₹80,000

 1. Expensive for New Buyers

For people looking to buy gold, especially during the festive season or for weddings, the high prices can be prohibitive. At ₹80,000 per 10 grams, gold is far more expensive than it was just a year ago, making it harder for new buyers to afford large quantities.

 Reduced Purchasing Power: Many families may have to rethink or downsize their gold purchases for weddings and other celebrations, which could affect traditional buying patterns.

 Higher Loan Collateral Requirements: With higher gold prices, gold loans also become more expensive as banks require more collateral or may offer smaller amounts for the same amount of gold.

 2. Volatility Risk

Gold prices, though currently high, can be volatile. A sudden economic recovery or change in global policies could cause the price of gold to drop sharply. Investors who buy gold at this high price could face losses if prices fall.

Market Volatility: While gold is generally a stable investment, it is not immune to price fluctuations. The current high prices could see a correction, and those buying at ₹80,000 may not realize the returns they expect.

 3. Reduced Jewelry Sales

Jewelry sales typically peak during festive seasons like Diwali and during the wedding season. However, with prices reaching record levels, jewelers may see a dip in sales as consumers opt for alternative, more affordable forms of investment or reduce the amount of gold they purchase.

 Lower Consumer Demand: As gold becomes more expensive, people may either reduce the quantity they buy or delay their purchases altogether. Jewelers might see reduced demand for heavy gold jewelry, impacting their business during key seasons.

 4. Gold Import Costs

India is one of the largest importers of gold, and the high price of gold is likely to increase the country’s trade deficit. This can weaken the rupee further, causing a ripple effect on the economy.

Increased Trade Deficit: The rise in gold prices means higher import costs, which can lead to a larger trade deficit. This could put pressure on the Indian economy, impacting various sectors and weakening the rupee further.

 5. Higher Making Charges

As the price of gold rises, jewelers often pass on the increased costs to consumers through higher making charges. This means that not only is the gold itself expensive, but the added making charges make purchasing gold jewelry even more costly.

 Costly Jewelry : For those buying gold jewelry, the high price of raw gold combined with higher making charges makes purchasing jewelry a less appealing investment compared to other options.

 Conclusion

As of October 23, 2024, the current gold price of ₹80,000 per 10 grams presents both opportunities and challenges. While it’s an excellent time for investors to cash in on their investments and for those looking to hedge against inflation, new buyers may find it prohibitively expensive. The volatile nature of gold prices means that while the outlook appears positive in the short term, caution is advised for those entering the market now.

Whether you decide to buy, hold, or sell your gold depends largely on your financial goals and risk tolerance. For long term investors, gold continues to be a valuable asset, but for those looking for immediate returns, the current price surge might be a double edged sword. Keep an eye on market trends and economic indicators to make the most informed decision.

This blog provides a detailed view of the pros and cons of today's gold price at ₹80,000, helping you navigate your investment decisions wisely.