The tradition of Indian households buying gold on Dhanteras or around Diwali has become one of the best performing investments in recent times. Gold has given a whooping 30.6% return in just a year from the previous Dhanteras; the total return is 56.8% if you had invested in the metal 2 years ago (in 2022) on Dhanteras day.
It is not only the short-term returns that look impressive, but even the long-term returns from the yellow metal are mostly in the double digits. Such a strong performance will influence many more to invest in the yellow metal around Diwali.
Historically, gold has seen multiple price corrections and stagnation for many years. So a good performance in the recent past offers no guarantee of higher returns in future. If you are planning to invest in gold, you must weigh your options and understand if the prices will continue to rise.
Big custom duty reduction fails to deter gold price rise
The shine of gold has not diminished despite the government cutting the custom duty sharply, from 15% to 6%, in the budget presented in July this year. A correction in gold prices that happened after the budget announcement of custom duty cut is now a thing of the past. “After the duty cut, gold prices in India initially dipped but have since rebounded sharply. From Rs 68,000 per 10g in July 2024, gold has recovered to Rs 76,000 per 10 g as of October 2024, representing a nearly 12% rise,” says Narinder Wadhwa, Managing Director of SKI Capital.
