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Not the best time to invest in gold, investors should wait for stability: Vidit Garg, director at MyGoldKart

"Gold prices have always plummeted after catastrophes."

February 28, 2022 / 11:26 AM IST
Gold, Gold Prices, Yellow Metal

Gold, Gold Prices, Yellow Metal

Vidit Garg, Director, MyGoldKart

For ages, gold has been considered as one of the most traditional investment vehicles due to its stable nature compared to other asset classes. This is regarded as a safe haven while other assets, such as equity, plummet at breakneck speed during adverse situations like the current Russian invasion of Ukraine.

Other macroeconomic risk factors, such as upside inflation pressure from high crude oil prices, suggest that volatility will continue to dominate the rest of 2022.

The outlook for gold is bullish in the current environment, as the precious metal has historically been considered as a hedge against inflation and significant economic and geopolitical shocks. With the current global instability, the yellow metal climbed to a 16-month high of $1,970 an ounce. Due to increased investment demand and concerns about growth, MCX Gold April future has risen by more than 7% so far in 2022. The world's largest gold-backed exchange traded fund, the SPDR Gold ETF, increased its holdings to 1,029.3 tonne on February 23, 2022, up from 975 tonne on December 31, 2021.

Price of gold is usually inversely proportional to the price of stocks. Another reason for the rise in gold price is that both government expenditure and money production rise simultaneously, causing prices to go north.

Having said that, it is not the best time to invest because historically gold prices have always plummeted after catastrophes. Hence, we advise investors to pause their buying till stability arrives.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Moneycontrol News
first published: Feb 28, 2022 11:26 am