Gold is an extremely valuable asset in the country and is constantly in high demand from the public. Be it occasions or as a sign of luck for a fresh start, gold symbolizes purity and worth.
However, the year 2020 saw a great deal in fluctuations in gold prices for reasons unnumbered.
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In this article, we have brought forth the reasons that have impacted gold prices in the current year and if investors should take the opportunity to invest in gold keeping in mind the current situation or not.
What is Gold Investment?
Investment is often made to survive future unpredictability. Gold is an investment that is ever demanding. With the limited supply of gold against continuous demand, gold prices always seem to positively surge.
The two types of gold investment by people are mainly by either buying physical gold in forms or ornaments and jewellery or by market related investment like gold ETF and gold funds.
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Like any other investment, people invest in gold to gain returns in the future. Putting in minimal amount to buy gold today and gaining much more on the invested amount in the future is the sole reason for investors to choose to invest in gold.
However, gold also shows fluctuation in its prices based on various factors like market trends, changes in tax bracket, government policies and more.
Reasons of Gold Rate increase in 2020
The year 2020 has seen tons of uncertainties and mishaps. From the spread of the global pandemic that took away lives of many to the disrupted relation between India and china, gold showed tremendous movement.
During uncertain situations the market is strikingly affected. Investor’s panic increases selling in the market that intrudes the volumes leading to the stock market to crash. This year the crash in stock market widely affected the gold prices as well.
After investors lost money in the market they ought to find another medium to safeguard their hard earned capital.
Knowing that gold is a safe haven and can be easily liquefied in the future, investors began transferring their funds into gold.
This made gold market sky rocket as it gained more worth in the eyes of the investors.
Plus, the changes in policies to cope with the pandemic was also another reason that lead to stability in gold prices.
With the current unreliability that the pandemic holds and loss of jobs and businesses, gold rates can see further fluctuations at least till the situation gets in control by the government and authorities.
Advantages of Gold investment
Gold is a precious metal whose demand will always flourish. There are many advantages that come alongside investing in gold.
Gold is highly used to hedge against future inflation.
Therefore investors buy gold today to safeguard speculated inflation in the future.
Gold as an asset can easily be liquefied in return for cash. If an investor plans to transfer his funds to another asset in the future, most often his/her first instinct is liquefying gold.
Investing in gold diversifies investor’s portfolio. Having only stocks of blue-chip companies may sometimes show volatile portfolio that depends on market trends. But investing in gold is rather an asset so worthy that its demand can never fade.
This article sums up reasons for the rising gold prices in the year 2020. As we know there is no end to investing, the earlier you invest at lower prices, the higher return is waiting for you in the future.
However, making investment strategy that diversifies your portfolio is a must when it comes to making the best use of your funds.
We hope this article is a key your dilemma of whether to invest in gold with the current market situation or not.
Disclaimer: No Deccan Chronicle journalist was involved in creating this content. The group also takes no responsibility for this content.