The festive season of Diwali kicks off with Dhanteras, a time when gold takes centre stage in investment conversations. Over the past year, this precious metal has delivered outstanding returns, with prices climbing nearly 30% since last Dhanteras.

From last year’s Dhanteras on November 10, 2023, gold prices have increased from ₹60,750 to around ₹80,000 per 10 grams.

In 2024 alone, domestic gold prices have surged more than 23%, outpacing the returns from equities.

The benchmark Sensex has delivered a gain of around 11% this year. In the last six months, it has risen over 8%.

Gold’s rally

According to S Ravi, Founder of Ravi Rajan & Co, “In the past year, gold has shown a steady increase in value, driven by global economic uncertainties, inflation pressures, and interest rate fluctuations.”

The ongoing conflicts such as the Ukraine-Russia crisis and the Israel-Hamas situation have further led investors to seek safe-haven assets, with gold being a traditional choice during turbulent times.

Additionally, central banks around the world have maintained accommodative monetary policies and there is a likelihood of softening interest rates in the US.

Hence, the demand for gold as a secure investment continues to grow.

Festive demand fuels interest in gold

The festive season also traditionally sees a spike in gold purchases, particularly during Dhanteras, where buying gold is considered auspicious.

Palka Arora Chopra, Director of Master Capital Services Ltd, notes that the rise in prices aligns with the typical surge in demand for gold during festive and wedding seasons.

She mentions, “Gold is frequently seen as a safe haven during difficult times, offering a hedge against inflation and market instability.”

Gold has deep cultural significance in India, symbolising prosperity and good fortune.

Vikas Singh, Managing Director & CEO of MMTC-PAMP, emphasises the importance of gold in Indian households.

“The auspicious ritual of purchasing gold and silver during special days and festivals continues to hold immense significance in our culture.”

So, should you invest in gold now?

As Dhanteras approaches, experts suggest that this might be an opportune time for investors to consider gold.

“Given the current global environment, it remains a good time to invest in gold,” Santosh Joseph, CEO of Germinate Investor Services said while emphasising gold’s role as a hedge against macroeconomic risks.

Sandip Raichura, CEO of Retail Broking and Distribution at PL Broking, notes a “bull flag pattern” in gold, indicating potential for further price increases.

Experts further recommend considering gold ETFs or Fund of Funds as a cost-effective way to invest.

These options provide liquidity and ease of access without the added costs associated with physical gold, making them ideal for long-term investment strategies.

The future of gold investment

Looking ahead, the combination of geopolitical uncertainty and the potential softening of interest rates in the US creates a favourable environment for gold to appreciate further.

Experts suggest that gold should ideally account for 5-10% of one’s investment portfolio to provide long-term financial security.