Gold vs Bank FD: Gold has long been a favoured investment option in India, particularly among low-income households and the rural population. Cultural affinities, marriages, and festival gifting continue to be the principal drivers of gold demand in India. According to a household study, lower and middle-income groups believe gold to be a superior investment than bank savings, noting its role as an inflation hedge and fungibility for raising short-term money. Plain gold jewelry is often popular since it has a higher realised value. This was discovered in the findings of a household survey performed by the India Gold Policy Centre (IGPC).
According to the survey results, gold demand in low-income households is not necessarily driven by income levels, but rather by a lack of access to financial and investment goods. “What’s more, in the Indian context, households in lower and mid-income groups, as well as in India’s rural belts, consider gold to be a better mode of investment than bank deposits,” the survey’s findings found.
The role of gold as an inflation hedge is the most comfortable consideration for them. Their actual experience and instinctive grasp of inflation have driven their investment strategy for years, rather than any official financial training. In this case, gold has become the default alternative when compared to other financial goods, making gold a natural hedge against inflation and eventualities.
Their faith in gold has also grown as a result of the physical metal’s fungibility, which has recently been put to the test again during the pandemic. As a result, gold automatically transforms into a dependable alternative investment with a track record that has been and continues to be a preferred investment choice among households. The strong preference for buying simple gold jewelry, which has a higher realised value when melted or traded compared to a studded item of jewelry, was another intriguing finding of the poll. This is a strong indicator, according to the World Gold Council, that gold is not only being bought for ornamentation but is also seen as a de facto investment commodity.
Certain gold jewelry is subject to government import limitations.
The government restricted the entry of some gold jewelry and other commodities on Wednesday in a measure that would reduce the import of non-essential goods. Now, in order to import these gold products, an importer would want government authorization or a license.
Gold prices are almost at a month high.
On Thursday, gold prices rose to a level not dissimilar to that of one month earlier. To reach its highest level since June 16, spot gold increased 0.3% to $1,962.11 per ounce by 0658 GMT. American gold futures increased by 0.2% to $1,965.80.