Should I Invest in Gold at Current Levels

Gold started on a promising note at $1693 per ounce in January this year. However, as the months passed by, some of the sanctity associated with the yellow metal began to diminish, and it reached a low of $1192 on June 28 this year. Since then, gold prices have shown a slow and steady recovery, but many investors are a bit skeptical of having the yellow metal in their portfolio. With the current levels of $1419 per ounce, investors are not sure whether gold will continue its recovery to reach where it started from this year or tank as a result of the recovery in the stock markets worldwide.

Any discussion on the future of gold prices should include the economic scenario in India – the largest consumer of gold. In India, the consumers’ appetite for gold has been so insatiable that the government has had to put curbs on the import of gold. Currently, Indian rupee is at the weakest levels vis-à-vis the American dollar. The decline in the value of rupee has pushed gold prices to a 9-month high. On the whole, gold prices will tend to rise in the coming months until the fag end of the year on account of the approaching festive and wedding season. Considering the current scenario, it is highly likely that as the demand of gold in India increases, it will have an effect on the supply of gold, leading to an increase in its prices.

Another factor that may have an impact on the gold prices is the current situation in Syria. With the possibility of US military action rising every day, investors are looking at gold as a safe haven. Staying true to its reputation of being an asset class to bank on during economic and political crisis, gold is offering an optimistic outlook for the investors in these times of gloom.

Investing in gold at the current levels can help investors in building up a solid portfolio. Considering the fact that the levels that we saw in the beginning of this year are a long way ahead, there is a good reason to be bullish on the yellow metal. While gold has in it to provide significant gains to investors in the coming time, those who wish to use it as a hedge against investment can also benefit from it in the long run. Despite our positive outlook on gold, we will still advise you to exercise discretion before investing in gold.

This is a guest post from Profit Confidential.

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