How to buy gold this time of year
It is considered auspicious to buy gold this time of the year. Inflation is on record high this year and it is not expected to slow down soon, with major central banks increasing their interest rate to contain inflation. The growth is affected by war and COVID issues, and agencies are downgrading the world GDP. How much gold can be given in FY 2023?
According to India Bullion and Jewellers Association's IBJA website, the price for 999 purity gold was Rs 51,340 per 10 grams on Monday, down from Friday's closing price of Rs 52,055. The experts are optimistic about the yellow metal with expectations of higher returns in the long term.
The assistant vice president, commodity research, SMC Global says Gold is getting mix triggers but the bias should be of upside. We can expect to see $2150 in dollar terms and Rs 56000 -- 58000 on MCX. One must keep it in portfolio because of the uncertainty, according to Bharti. ETF and central banks buying have been increased and most likely will continue the same trend in the future. Any pause in the equity market will give a boost to gold prices, but one should look at the dollar index and US treasury yield, both of which are making multi years high which is putting pressure on gold prices. When the economy is hit hard due to COVID and war, higher inflation will make it attractive, according to experts. Motilal Oswal Financial Services report states that gold prices could find immediate support at Rs 50,000 followed by 48,000 and Rs 46,500. There are chances that long positions would be exited with rallies on the upside towards 55,000.
The prices could form a broad range until and unless uncertainties are not settled, hence some recovery could be seen in the prices, although we believe these rallies on the higher may not sustain and should be used to exit from the long positions, said the brokerage house.
You can buy gold Exchange Traded Funds ETFs through your demat accounts. They are easy to buy and sell like shares, which gives them high liquidity. If sold after three years, ETFs are considered long-term capital gain and taxed at 20 per cent post indexation. If sold before three years, it is considered as a short-term capital gain and taxed according to your income tax slab.
If you don't have a demat account, you can buy gold mutual funds. NAVs are declared daily at the end of trading hours. They are costlier than investing in gold ETFs as you have to bear the cost of gold ETFs and gold funds. One can buy Sovereign Gold Bonds SGBs when the next tranche opens because of the benefits of digital gold. SGBs are securities denominated in grams of gold, issued by the Reserve Bank of India RBI on behalf of the Government of India. The interest rate of SGB is 2.50 per cent per annum, a feature that sets it apart from other digital assets. For example, if you have a value of Rs 50,000, you will get interest of around Rs 1,250 per annum. The gold value at current market prices is returned along with interest income at the time of maturity.
SGBs have a lock-in of 5 years and a total tenure of 8 years from the date of issue. They are listed on stock exchanges and can be traded subject to a lot of liquidity which could affect investor returns. Interest income is subject to tax under income from other sources, but capital gains on maturity are exempt from tax.