Gold prices rise as the festive season approaches, know the price in India on 28 September 2024

As the festive season approaches the demand for gold traditionally increases especially around Dhanteras and Diwali. However this year even before the festivities begin gold prices are already hitting record highs. In India gold has soared to ₹77000 per 10 grams creating concerns among buyers and investors alike. In Delhi the price has reached ₹77985 per 10 grams with similar price increases across other states.

Why Are Gold Prices Rising?

Gold prices usually see some fluctuations during the year but the significant spike in 2023 has raised many questions. To put things into perspective the price of gold in Delhi on January 1st was around ₹65000 per 10 grams. Fast forward to today and the price has surged past ₹77000. Several factors are contributing to this steep rise in gold prices with the primary reasons being geopolitical tensions and economic shifts.

1. Geopolitical Tensions Fueling Demand

One of the most significant reasons for the surge in gold prices is global geopolitical instability. As tensions rise particularly in volatile regions like the Middle East investors seek safer avenues for their capital. Gold often considered a "safe-haven" asset during uncertain times becomes the go-to investment option. With increasing demand prices naturally rise.

Currently the conflict between Israel and Hezbollah along with escalating issues in Lebanon has created further instability. This geopolitical unrest is pushing more investors toward gold further driving up its demand and price.

2. Federal Reserve's Monetary Policy Impact

Another critical factor influencing the rise in gold prices is the recent decision by the U.S. Federal Reserve. On September 18th the Fed decided to cut interest rates by 0.50% leading to a weakening of the U.S. dollar. As the value of the dollar fell to 100.51 investors turned their focus to gold as a more reliable asset. The inverse relationship between the dollar's value and gold prices is a well-known economic principle. When the dollar weakens gold becomes more expensive in international markets contributing to the price hike.

3. Inflation and Market Uncertainty

Global inflation has been another major factor. As inflation rises the purchasing power of currencies decreases prompting investors to hedge against inflation by investing in gold. This is particularly relevant during times of high inflation when other asset classes such as stocks or bonds might become more volatile. Gold’s historical role as a store of value makes it attractive during inflationary periods.

When Will Gold Prices Decline?

With gold prices skyrocketing buyers are left wondering when they might see some relief. However the current outlook suggests that prices might remain elevated for the foreseeable future. According to financial experts as long as geopolitical tensions continue particularly the conflict between Israel and Hezbollah along with the instability in Lebanon there’s little hope for a significant decline in gold prices.

Moreover other factors such as the U.S. Federal Reserve’s policies and global economic uncertainty continue to support high gold prices. Although minor corrections could occur a substantial drop in prices seems unlikely until these broader issues are resolved.

Should You Invest in Gold Now?

Given the current high prices many potential buyers are questioning whether this is the right time to invest in gold. While buying gold during its peak may seem risky long-term investors often view gold as a steady reliable investment that will retain its value over time particularly during periods of economic instability.

1. For Long-Term Investors

If you’re investing in gold with a long-term perspective this may still be a good time to buy. Gold has proven to be a stable investment over decades often appreciating during times of market volatility. Despite the current high prices the ongoing geopolitical and economic uncertainties could push prices even higher in the coming months.

2. For Short-Term Buyers

However if you're looking to buy gold for short-term gains or for personal use such as during the upcoming festival season it might be wise to wait and watch. Prices could experience slight corrections especially if geopolitical tensions ease or the dollar strengthens. Timing your purchase carefully could save you a significant amount of money especially with prices already near record highs.