Is Buying Gold Before Diwali and Holding Until the US Election Results a Smart Move?

Gold prices have been on a steady rise reaching new highs recently. Last Friday MCX gold rate hit a record ₹77,839 per 10 grams while the global spot price of gold reached a new peak of $2,722 per troy ounce. According to experts this surge is driven by several key factors including geopolitical uncertainties, possibility of further interest rate cuts and the upcoming US Presidential election. As these issues continue to unfold the uncertainty surrounding them is expected to persist making it challenging for investors to decide the right time to sell and book profits.

Why are Gold Prices Skyrocketing?

Experts explain that the rise in gold prices can be attributed to several factors. Most notable are geopolitical tensions, potential interest rate cuts and looming US Presidential election. With these factors in play, gold has become an attractive option for investors seeking a safe haven during uncertain times.

Given the current situation many people are wondering whether they should buy gold before Diwali 2024, a time when gold purchases traditionally increase due to cultural and festive reasons and hold onto their investment until after US Presidential election.

Should You Buy Gold Before Diwali 2024?

Experts advise investors to buy gold before Diwali 2024. In India gold holds cultural and sentimental value and purchasing gold during festivals like Dhanteras is considered auspicious. This has made India the second largest consumer of gold trailing only China. During Dhanteras demand for gold surges and this year is expected to be no different.

Current geopolitical tensions and the potential for further rate cuts have contributed to the upward trend in gold prices. While the market is currently on an uptrend there could be some volatility in the weeks leading up to US Presidential election and this may affect gold prices. However, the bigger factor to watch will be Federal Reserve's decision on interest rates after the election which could further impact gold prices.

Gold as a Safe Haven

In times of uncertainty gold has always been seen as a safe investment. It serves as a hedge against market volatility and is considered a reliable store of value when other assets are at risk of devaluation. Given the unpredictable political and economic landscape many investors are turning to gold as a means of protecting their wealth.

Factors Driving Gold Prices Today

Five key factors that are currently driving gold prices:

1. Geopolitical Uncertainty and Safe Haven Demand: Rising tensions particularly in the Middle East have increased demand for gold as a safe haven asset. With the ongoing Israel Iran conflict and the potential for escalation investors are seeking refuge in gold to protect against market risks.

2. US Federal Reserve Rate Cut: Recent inflation data in US has shown that inflation is slowing though it rose slightly more than expected. This has led to expectations of additional interest rate cuts by Federal Reserve in the coming months. Lower interest rates make gold more appealing as it does not offer interest unlike other investments.

3. US Presidential Election: Upcoming US Presidential election adds another layer of uncertainty to the market. There is speculation that a Trump victory could lead to fiscal and monetary policy changes potentially causing market volatility. Historically gold has performed well during times of political uncertainty making it a good investment leading up to the election.

4. Global Monetary Easing: Central banks around the world including European Central Bank have been cutting interest rates in an effort to stimulate their economies. This global trend of monetary easing is supporting the broader upward trend in gold prices.

5. Diwali 2024: As Diwali approaches demand for gold is expected to increase especially in India. This seasonal demand, combined with strong inflows into global gold ETFs is expected to further support gold prices in the near term.

Should You Buy Gold Before Diwali and Hold Until After US Presidential Election?

With the factors mentioned above experts believe that buying gold before Diwali could be a smart move especially with the anticipated increase in demand during the festive season. Holding onto gold until after US Presidential election could provide further opportunities for profit as election related uncertainty and potential policy changes could drive prices even higher.

Experts recommends a well timed exit from gold investments after the election to lock in any gains from the current uptrend. This strategy could allow investors to benefit from both the festive demand for gold and any further price increases driven by global events.

Conclusion

Gold prices are currently on an upward trajectory driven by several factors such as geopolitical tensions, potential interest rate cuts, and the upcoming US Presidential election. While it may be difficult to predict exactly how gold prices will move in the coming months, the overall outlook for gold remains positive.

For investors, buying gold before Diwali could be a good strategy as demand for the yellow metal is expected to rise during the festive season. Additionally, holding onto gold until after US Presidential election could allow investors to take advantage of any further price increases caused by market uncertainty.

However, it’s essential to keep an eye on the factors driving gold prices and make an informed decision about when to book profits. Whether you’re investing in gold for cultural reasons, as a hedge against market volatility or as a long term investment the current trends suggest that gold could continue to offer good returns in the near future.