What Should You Know About Gold Futures Investing?
When it comes to investing, the preferred investment options are stocks, real estate, and gold. While stocks and real estate are volatile markets, gold is a much safer and more reliable option. Most people treat gold as a ‘hedge’ against inflation. With changing times, the craze has not diminished at all. In fact, it has evolved a lot with various options for purchasing and trading in gold. Some popular new-age investment options are ETF, digital gold, and gold futures.
What is Gold Futures?
Gold Futures is a speculative investment idea, which involves a certain amount of risk. In this investment model, the buying and delivery of gold are split into two parts. The investor buys a particular amount of gold by making some initial payment and agrees to take the delivery later, at a mutually agreed date. As per the agreement, the balance payment is to be made at the time of delivery.
Advantages of Investing in Gold
There are several benefits of investing in gold futures are mentioned below:
- While going for Gold Futures, the investor does not take physical delivery of the gold when buying. This does away with the immediate need for keeping the gold safe and secure.
- While buying the gold, the investor has to pay only a marginal amount. This makes it easier for the investor to enter the trade even with a smaller amount. The balance amount can be paid later at the time of delivery.
- The investor gets extra time to arrange for the remaining funds. This way, the investor gets a considerable amount of liquidity.
- Investors are allowed to short-sell their investments.
Risks Associated with Gold Futures
As mentioned above, Gold Futures involves speculation. So, some amount of risk is bound to be attached to it. Some of the risk factors involved are mentioned below:
- Any speculation act involves risk by default. This may put the investor in a lurch during the trade.
- Gold prices are subject to fluctuations. In case the gold prices fall by a great amount, during the time gap of signing the agreement and taking physical delivery, the investors stand to lose a lot of money.
- Gold prices are guided by various market and political conditions. Even the USD-Rupee exchange rate has an impact on gold prices. A slow-down in the market, any political turbulence anywhere globally, or fluctuation in the exchange rate can hurt gold prices. This can be very risky, especially for small investors.
Future Gold Rate Prediction in India
The current price of 24 carat gold in India (as of 3 January 2022) is around Rs. 49,700 for 10 grams. Throughout the year 2021, the gold price has traded between Rs. 47,000 to Rs. 49,000 per 10 grams of 24-carat gold. However, going into the New Year 2022, the gold prices are expected to rise upwards and may go up to Rs. 53,000 for 10 grams.
How to Buy Gold in India?
Buying gold in India is a widespread activity. Indians buy gold for various reasons. Some people buy it to make ornaments, while some buy it to offer to temples. Some people buy gold purely as a hedge against inflation.
To correspond to multiple buying cases, there are various ways of buying gold in India. The most traditional way of buying gold is in jewelry or in the form of coins, biscuits, bars, or bullions.
However, with changing times, customers’ preferences are changing. Today, customers look for an investment option that gives them higher returns and increased safety and convenience. The market has responded by offering various new-age gold investment options like ETF, digital gold, Gold Futures, among others.
So, if you are looking to buy physical gold, there are several jewelers and even banks in the market. In addition, there are some online platforms like OroPocket, which allow you to invest in new-age investment ideas.
With OroPocket, one just needs to download the app, enter the desired amount of gold, or the money to be invested, make the payment, and you are done. It’s safe and convenient.
Gold, as a commodity, has a special place in the heart and minds of people across the world. But for Indians, it has an emotional attachment as well. People buy and stock the yellow metal to secure their future.
Today, there are several ways of buying and trading gold. Most new-age investment methods ensure that the investors do not have to worry about physically storing the precious metal. One such way of investing in gold is Gold Futures, where one can make money by speculating the future rise in gold prices. And given the current scenario, this is fast gaining popularity in the country.
Q1: Is gold futures a good investment?
Ans: Though there are certain risks involved with Gold Futures, on the whole, it is a good investment option. It allows small investors to buy gold by paying only a small amount and paying the balance later when they take physical delivery.
Q2: Will gold price increase in future?
Ans: After staying more or less stable in 2021, the gold prices are expected to increase in 2022.
Q3: What is the future forecast for gold?
Ans: In 2022, the gold prices are forecasted to touch a figure as high as Rs. 5,300 for 10 grams of 24 carats gold.