Gold touched ₹75,000 per 10 gm. Should you buy gold or sell gold at this point?
This article explores the probabilities of gold price movement, both up and down, from current price levels.
Gold touched ₹75,000 per 10 gm. Should you buy gold or sell gold at this point?
Posted on 28 Apr 2024
Author: Sayan Sircar
6 mins read
📢Join 2400+ readers on WhatsApp and get new post notifications!
This article explores the probabilities of gold price movement, both up and down, from current price levels.
📚 Topics covered:
- Why has gold reached ₹75,000?
- How gold has moved in the short term in India?
- How much gold price expected to move in the next few months?
- Will gold rise or fall now?
- What should you do if you need to purchase gold soon?
Why has gold reached ₹75,000?
The price of 99.9% purity gold recently (20-Apr-2024) reached a lifetime high of more than ₹75,000/10gm on the back of news of the Iran-Israel conflict. Gold prices, always track the risk of geopolitical risks, and have reached today’s level after a 52-week low of ₹58,000/10gm in October 2023.
This article explores how gold prices have moved in price bands like -5% to 5%, -10% to 10% etc. in India in the short-term (1-month, 2-month up to 1 year) so that investors looking to enter or exit gold can make an informed decision.
How gold has moved in the short term in India?
The chart above shows rolling gold price returns for various short-term periods (up to a year) since 2007. We have used the beginning of month 24CT gold prices since March 2007.
How much gold price expected to move in the next few months?
| Range | 1M | 2M | 3M | 6M | 1Y |
|---|---|---|---|---|---|
| -5% to 5% | 74% | 59% | 53% | 35% | 22% |
| -10% to 10% | 94% | 88% | 78% | 65% | 42% |
| -15% to 15% | 99% | 96% | 91% | 82% | 56% |
| -20% to 20% | 100% | 99% | 98% | 90% | 66% |
| -25% to 25% | 100% | 100% | 100% | 96% | 76% |
| -30% to 30% | 100% | 100% | 100% | 98% | 85% |
The table above shows that historically
- it is virtually certain that in the short-term (up to 3 months), gold prices do not move beyond the range of +/- 15%
- longer the horizon, the more the chances of a sharp movement in either direction
- there is a drastic fall in the certainty of price movement as the period goes to 1 year. We reach the 95% level only if we expand the range from -40% to 40%
There is no chance that anyone can predict actual price movements. The best we can do is look at the historical probabilities and extrapolate the trend to short periods only.
Related:
A complete history of gold prices in India since the 1950s
Will gold rise or fall now?
| Probability | 1M | 2M | 3M | 6M | 1Y |
|---|---|---|---|---|---|
| Rise | 59% | 60% | 64% | 74% | 77% |
| Fall | 41% | 40% | 36% | 26% | 23% |
If we ignore the amount of change and just look at the direction, there is more chance, historically, that gold will rise in the short term. However, these are probabilities. Just like a coin toss does not guarantee either a head or tail, the table does not guarantee any particular direction of movement.
To understand whether to purchase gold now or later:
What should you do if you need to purchase gold soon?
If you must buy gold soon, say for a wedding, you should consider what happens if the gold price actually moves between now and the wedding.
If your target is to buy 100gm of gold (around ₹7.5 lakhs at current prices), as per the data below:
| In grams | 1M | 2M | 3M | 6M | 1Y |
|---|---|---|---|---|---|
| 95 to 105 gm | 74% | 59% | 53% | 35% | 22% |
| 90 to 110 gm | 94% | 88% | 78% | 65% | 42% |
| 85 to 115 gm | 99% | 96% | 91% | 82% | 56% |
| 80 to 120 gm | 100% | 99% | 98% | 90% | 66% |
| 75 to 125 gm | 100% | 100% | 100% | 96% | 76% |
| 70 to 130 gm | 100% | 100% | 100% | 98% | 85% |
There is an 88% chance, for example, that the gold you will end up buying in the next 2 months will be within 90-110gm for the same amount of money. It may not be possible to distinguish, without using a jeweller’s scale, if a piece of jewellery has 90 vs 110 gm of gold. Of course, the best way to accumulate gold for a wedding in the far future is slightly different: What is the best way to accumulate gold for your child’s wedding?
What's next? You can join the Arthgyaan WhatsApp community
You can stay updated on our latest content and learn about our webinars. Our community is fully private so that no one, other than the admin, can see your name or number. Also, we will not spam you.To understand how this article can help you:
If you have a comment or question about this article
The following button will open a form with the link of this page populated for context:If you liked this article, please leave us a rating
The following button will take you to Trustpilot:Discover an article from the archives
Previous and next articles:
Portfolio Construction
How much lower portfolio value do you end up with if you do not invest for a few years in between?
This article shows how to understand the impact on your portfolio if you stop investing for a few years between today and retirement.
Published: 24 April 2024
6 MIN READ
House Purchase
Loans
How much time and interest do you save if you pay off your home loan using a step-up EMI?
This article shows how quickly you can pay off your home loan, and even save a lot of interest, by increasing your EMI steadily year-on-year.
Published: 1 May 2024
4 MIN READ
Latest articles:
House Purchase
Loans
Insurance
Understanding Insurance Requirements for Home Loans in India: What's Mandatory and What's Optional?
This article provides a clear guide to navigating the insurance requirements when securing a home loan, helping you make informed decisions.
Published: 15 May 2024
3 MIN READ
Behaviour
House Purchase
Loans
How to manage a home loan if you are worried about job loss?
This article discusses the steps for investors in high-income brackets but hesitant to commit to a home loan due to the fear of job instability.
Published: 14 May 2024
8 MIN READ
Topics you will like:
Asset Allocation (21) Basics (8) Behaviour (13) Budgeting (12) Calculator (25) Case Study (6) Children (17) Choosing Investments (40) FAQ (12) FIRE (13) Gold (22) Health Insurance (5) House Purchase (33) Insurance (17) International Investing (12) Life Stages (2) Loans (20) Market Data (8) Market Movements (17) Mutual Funds (47) NPS (8) NRI (19) News (18) Pension (8) Portfolio Construction (53) Portfolio Review (27) Reader Questions (8) Real Estate (7) Research (5) Retirement (38) Review (16) Risk (6) Safe Withdrawal Rate (5) Set Goals (28) Step by step (15) Tax (59)Next steps:
1. Email me with any questions.
2. Use our goal-based investing template to prepare a financial plan for yourself.Don't forget to share this article on WhatsApp or Twitter or post this to Facebook.
Discuss this post with us via Facebook or get regular bite-sized updates on Twitter.
More posts...Disclaimer: Content on this site is for educational purpose only and is not financial advice. Nothing on this site should be construed as an offer or recommendation to buy/sell any financial product or service. Please consult a registered investment advisor before making any investments.
This post titled Gold touched ₹75,000 per 10 gm. Should you buy gold or sell gold at this point? first appeared on 28 Apr 2024 at https://arthgyaan.com
We are currently at 401 posts and growing fast. Search this site: Copyright © 2021-2024 Arthgyaan.com. All rights reserved.