Gold prices in India surged to record highs on Dhanteras, a popular occasion for buying gold due to its auspicious value in Hindu culture. On this day, gold prices climbed to about ₹80,000-₹81,000 per 10 grams, a substantial increase driven by both festive demand and a blend of global and domestic economic factors. This spike reflects the combination of high domestic demand, geopolitical uncertainties, and market volatility, which together make gold an appealing short-term investment for safety-conscious investors.
While these dynamics have pushed gold into a perceived safe-haven asset, the case for buying gold at peak festive-season prices becomes less attractive when viewed as a long-term investment:
- Overinflated Festive Pricing: Gold’s price inflation around Dhanteras reflects heightened demand rather than underlying value, meaning that buyers today are paying a premium. Historical trends show that gold prices often retreat post-Diwali season, leading to short-term losses for investors who buy at peak prices.
- Volatile Influences on Gold’s Long-Term Value: Gold has been influenced by multiple external factors—rising inflation, volatile interest rates, and the potential for economic instability driven by geopolitical factors. However, global conditions and central bank policies could also drive corrections in gold prices, as seen when speculators and funds shift to other investment vehicles in times of market stability.
- Low Comparative Yield: In the long run, gold has generally lagged behind equities and other high-growth assets in terms of returns. While gold does provide a hedge against inflation, the opportunity cost of investing in it over stocks or other higher-yield assets can be substantial over time, especially when bought at premium festive prices.
- Liquidity and Resale Issues: For many investors, gold lacks the flexibility of liquid assets like stocks or bonds. Selling gold back to the market involves potential losses in terms of purity checks, resale fees, and a lower buy-back rate, especially when purchased at peak prices.
In summary, while the tradition of buying gold on Dhanteras has a strong cultural appeal, the high price point and market conditions make it less appealing as a value investment at this time. For long-term investors, waiting for post-festive price corrections or exploring diversified investment options might prove more advantageous.
