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When to buy Digital Gold?


20th May 2022

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Gold, an investor's best friend, needed to take on a new avatar with the changing world. This was not because the new-age investors couldn't view its utility; instead, the lack of flexibility and liquidity kept this shiny metal out of the GenZ portfolio. The new avatar our old friend adopted was 'Digital Gold'. Now, users can buy gold at their convenience at any time of the day for any amount of money. This, along with the excellent returns gold has provided in the preceding years, has been the key reason for the new age investors to show interest in this investment avenue.

But, the biggest question one asks before buying an asset is 'should I wait or buy?'. Gold investment can be timed according to historical trends and current scenarios, unlike other instruments like stocks, crypto, and mutual funds. Although we can't help you mark your calendars for the Golden day, this blog would help investors make informed decisions while buying the shiny metal.

Factors Affecting the Price of Gold

  • Festivals

Indians and their love for gold is no hidden fact. Be it Dhanteras or Akshay Tritiya, the rush at the jewellery stores are a living testament to this love. However, this heavy demand creates a demand-supply gap, leading to increased prices.

  • Inflation

Gold has always been comparatively stable concerning currency and has attracted investors and individuals who feel safe holding their capital in gold rather than cash. Thus, more investors seek to buy this metal when inflation rises, thus skyrocketing its prices.

  • Global Events

Markets like stability! So, if the world maintains the status quo or the conditions improve, the stock market shows positive growth, and investors remain focused on equity. However, any disturbance, say, a calamity, a war, government overthrow etc., makes the stock markets take a nosedive, and investors again run towards this grand old investment, thus driving the price of gold.

  • Interest Rates

The interest rate on various financial products and services changes from time to time. These have an inverse relation with the speed of gold; as the interest rates increase, investors tend to invest in these comparatively stable instruments rather than a relatively volatile commodity like gold. This causes a dip in the price of gold.

So, when to buy gold?

Img. Source - TrbBullion

Although gold doesn't historically revisit the previous year's lows in a consecutive year, it can be seen that the best time to buy gold can be thought to be between the months of late March to early August.

This was a summary of the factors one might consider before buying gold and deciding the timing for the same. However, it must be noted that gold must be invested as a long term investment as it has historically given good returns to investors in the long run.

So, gold indeed is an all-weather friend, and it would have been so lovely had an app existed that would enable us to buy gold at any point in time, isn't it? Oh, wait… it does! Check out Spenny today for live gold rates and a 24x7 buying facility. We'll leave you here while you explore our app and website!

Till then, Stay Safe! Invest Safer!!

Q. How is digital gold taxed?

Ans. Digital gold is subject to 3% GST while buying and the usual capital gains taxes depending on the period of holding on the event of a sale.

Q. Why is there a difference between the buying and selling price of digital gold?

Ans. As in the case of all the assets, there is always a difference between buying and selling price of (digital) gold known as the spread. This difference between the buying and selling price pays for the various charges levied by intermediaries like payment gateways, trustees etc. Furthermore, this difference is also caused by the demand-supply gap.

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