Does it make sense to buy gold at such high prices? Does it make sense to buy gold during this pandemic when everyone is saving up?
Indians are well known for their love for gold. This yellow metal has had cultural as well as historical significance for us.
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Especially during this festive season – Dussehra when there is a rush to buy gold among indians. Gold is considered to be a symbol of wealth, of goddess Laxmi and a store of value.
But this year, when the gold prices are elevated due to the COVID-19 pandemic, everyone is left asking whether it is wise to buy gold or not.
Currently, people are saving up for the essentials and discretionary spending is put on the back burner.
The demand for jewellery is down to 74 percent on a YoY basis to 44 tonnes(t) – the lowest quarterly, according to the data released by the World Gold Council (WGC).
Another factor related to this is the high rainfall India has had these last couple of weeks. This has caused inundation and damaged precious crops.
This would have a bearing on the rural income (rural india constitutes 2/3rds of total gold buyers in india )
Despite all that, here are some reasons why one should invest in gld this year-
– COVID-19 cases are not going down any time soon
– GDP growth has contracted sharply in advanced and emerging economies
– Consumption would help invigorate the economy. Which right now is muted.
– Central Banks across the world are reducing interest rates and keeping a supportive stance to boost the economy.
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