Gold as an investment option: Demand down 15% in 10 days

Retail demand for gold as an investment has gone down by 15% in the last ten days amid a sudden jump in the price of the yellow metal, jewellers said.

With prices increasing by nearly ?1,500 to ?54,260 per 10 gm, people who accumulate gold in the form of coins and bars are shying away from buying the metal, they said.

“Gold has picked up in price action massively, rising by nearly $60 per ounce in the last two weeks alone to trade around the $1800 levels,” said Colin Shah, MD of Mumbai-based Kama Jewellery, attributing the price increase largely to dovish commentary by the US Fed on its monetary policy. “Looking ahead to December, the metal looks set to extend recent gains, due to a combination of softer inflation prints, weaker economic data points and chances of the Fed hiking interest rates by 50 bps on December 14,” he said.

According to Shah, $1,850 a troy ounce seems to be the technical level the metal can be expected to reach by the end of December, with further interest hikes forecast for next year to keep investors cautious. “We expect the metal to retreat by a small margin in the middle of December around the Fed announcement.”

Demand for coins and bars in the first nine months of 2022 at 117.1 tonnes was 8.83% higher from a year earlier. “The volatility in gold prices will continue till January,” said Suvankar Sen, MD of Kolkata-based Senco Gold & Diamonds.

Investment managers, meanwhile, say it is prudent to invest in gold as prices are still way short of the all-time high hit earlier this year.