Gold bull run unlikely to fade away anytime soon. This could be the right time to buy

Gold has grown substantially over the past few years, and this year has been particularly notable for the precious metal. From last Dussehra to this year’s Dussehra, the yellow metal has given a return of 23 per cent outperforming many asset classes and instilling the confidence among Indians to invest in gold.

Since early 2024, the price of gold has been climbing, and the uptick has been nothing short of remarkable, with gold shattering multiple price records so far this year with an expectation that it will cross the Rs 80,000 per 10 gm mark by the Dhanteras-Diwali period when Indians buy gold to bring in prosperity to home.

The war in the Middle East, coupled with the interest rate cut by the US Federal Reserve has supercharged gold’s allure as a haven asset.

The bull run in gold is unlikely to fade away any time soon. The US Presidential election is just a fortnight away which is creating a lot of volatility in the global financial markets with gold gaining due to volatility in other asset classes. Also, all eyes are on whether the Federal Reserve cuts interest rates in its upcoming meeting on November 6 and 7, just after the US elections are over. If at all the Fed cuts rate at its upcoming meeting, then unexpectedly it will further impact the gold prices. Besides input for jewellery and asset class, gold is a safe haven for investors during times of uncertainty. It is a hedge for investors against any uncertainty and price volatility.

The rising tension in the Middle East, which is unlikely to die down soon, is also giving a fillip to the gold prices.

The reduction of gold import duty in the Union Budget from 15 per cent to 6 per cent has had a significant impact on the market, boosting customer confidence and making gold more affordable. The gold import duty cut had initially energised the gold jewellery demand ahead of the festive season but the continuous surge in prices has created a frenzy among the Indians to buy gold to hedge against inflation, which rose to a nine-month high in September to 5.49 per cent.The gold trade is witnessing renewed optimism among consumers to purchase jewellery, and the positive sentiment will surely impact the festival and wedding season jewellery purchases with a strong revival in volume-based demand.Rural demand, in particular, is showing signs of recovery. With an improved monsoon season and higher crop sowing this year, rural economic conditions are set to strengthen, which is anticipated to drive increased gold purchases, especially during the festive period. Rural India accounts for 60 per cent of the country’s annual gold consumption of 850 tonnes. A recovery in rural demand adds to the positive market sentiment for gold jewellery.

Also, there are several weddings lined up in November and December, which will add a fillip to the gold demand in India. Gold in India is not only considered as an asset to hedge inflation, but it is also believed to be a source of prosperity, wealth, and happiness for generations. Gold is thought to do wonders for creating prosperity not just for individual homes but entire families as well.

India’s jewellery sector is entering the festive season with optimism, spurred by government policy, rising gold prices, technological advancements, and innovative design trends. From gold and diamond pieces to personalised and sustainable jewellery, consumers have a wealth of options this season. The festive season is set to sparkle brighter than ever, with the sector expecting robust growth and elevated consumer sentiment.

(The author MP Ahammed is Chairman, Malabar Group. Views are own)

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