Planning to Buy Gold on Dhanteras 2022? Here's What You Should Know Before Investing

Dhanteras 2022: Buying gold is considered auspicious during Dhanteras. From jewellery to gold coins people plan their purchases around this time of the year. Huge crowds throng outlets with sales touching the year’s peak. Dhanteras is observed on the 13th lunar day of Krishna Paksha (dark fortnight) in the Vikram Sambat Hindu calendar month of Aaswayuja in the Amaavasyanta Luni-Solar Calendar.

On festivals, the age-old tradition of buying gold like — jewellery, bars, and coins for Indians remains integral, particularly during Dhanteras and Diwali. Generally, July – September is a seasonally weak period for gold demand due to monsoons and inauspicious periods like Pitru-Paksha when buyers usually prefer to postpone gold purchases.

According to the Confederation of All India Traders (CAT) and AIGF, about 15 tonnes of gold was sold across the country on Dhanteras in 2021, which was valued at around Rs 7,500 crore. Where gold and silver were purchased in Delhi worth about Rs 1,000 crores, about 1,500 crores in Maharashtra, about 600 crores in Uttar Pradesh, and about 2,000 crores in South India.

According to reports, the demand for precious metals jumped by 40 per cent year-on-year (YoY) ahead of the Dhanteras with gold contributing to 70 per cent of the overall demand during this festive season.

Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities, in an exclusive interview with speaks about the outlook for the bullion market ahead of Dhanteras and Diwali. He also explains why buying gold can be good amid the recessionary fears.

After Two Years of Covid- What is the Outlook for the Bullion Market this Dhanteras?

“For the Dhanteras and balance year of 2022, the expectation is mixed amid conflicting factors. Geopolitical tensions, recessionary fears, and festive and wedding demand might keep the positive momentum however there might be headwinds in terms of the Fed’s aggressive stance, higher import duty, and high inflation. On the price outlook front, the US dollar would be the key as any corrective indication from the American currency might be supportive of gold prices,” he said.

What are the Top Concerns for the Bullion Market Right Now?

Rao explained, currently, the top concern is the Fed’s aggressive stance on taming inflation by hiking interest rates. The higher-than-expected US inflation print has almost made it certain that the Fed might go for a 75-bps hike in their upcoming meeting in November. For this reason, gold bulls have been held back as it increases the opportunity cost of holding the non-yielding asset.

Why Should you Invest in Gold on this Dhanteras? 

“Although gold is being pressurised amid Fed’s monetary tightening stance it might be supported at lower levels on the back of geopolitical tensions like Russia and Ukraine. Additionally, recessionary fears could support gold as a safe haven,” Rao explained.

What has the Gold Price Trend Been in the Previous Years Around Dhanteras?

Rao said: “It has been a mixed trend in October in the last 5 years starting in 2018. During October month Gold has risen 3 out of 5 years with absolute monthly gains of 4 per cent plus in 2018 and 2019 October month respectively. (Data as per MCX prices)”

Target Price of Gold Till Diwali 2023

From 2022 to 2023 Diwali, that is in the next 12 months, we expect the yellow metal to average at around Rs. 54500/10gms, Rao suggested.

Disclaimer: The views and investment tips by experts in this report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.

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By jaghit

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