Gold has long been considered a safe haven asset, especially during times of economic uncertainty and crisis. In India, gold has traditionally been a popular investment choice due to its cultural significance as well as its ability to act as a hedge against inflation and currency fluctuations. In this article, we will explore the current state of gold INR (Indian Rupee) and why it presents a compelling investment opportunity.
Understanding Gold INR Calculation
To accurately assess the value of gold in Indian Rupee, it’s essential to understand the calculation involved. The process starts by taking the dollar gold price and multiplying it by the USDINR exchange rate. Next, an additional 15% for duties and taxes is factored in. Finally, the total is divided by 31.1 grams per troy ounce (the standard measurement for gold). This formula provides an accurate representation of the gold INR price
Analysing the Market Trends
In recent sessions, gold INR has experienced a slight drop from 61,500 on 10 grams (or 61.50 per gram) to 59,400. However, there is an interesting pattern emerging known as an inverse head and shoulders.
This pattern suggests a potential bullish trend, with a tight right shoulder indicating a significant breakout. For short-term traders, a stop loss at 6,000 could be considered, and the trade could potentially reach 61,600 levels in a short period.
Long-Term Outlook for Gold INR
While short-term fluctuations are important for traders, it’s crucial to consider the long-term outlook for gold INR as well. Looking at the long-term chart, there is no weakness in gold’s performance. Every dip in the price presents an opportunity to buy because the overall suggestion is that gold will continue to rise significantly in the future. Therefore, if you are a long-term investor, it is advisable to view gold as an allocation tool rather than solely a trading tool.
Gold as a Protective Asset
To determine the appropriate allocation of gold in your investment portfolio, several factors come into play. A common rule of thumb suggests allocating a percentage equal to half your age as a percentage of your net worth. For instance, if you are 50 years old, 25% of your portfolio should be allocated to gold. This allocation strategy aims to offer long-term stability and protection against currency devaluation, economic crises, and geopolitical uncertainties.
Gold has proved to be a reliable and stable asset class over the years, offering an average Compound Annual Growth Rate (CAGR) of around 11.7% in INR terms. This performance is comparable to the Nifty index, making gold an attractive investment option. By including gold in your investment portfolio, you gain protection against potential distressing times and crises. Given the inevitability of economic downturns, having gold as a hedge can provide a buffer and maintain the value of your overall holdings.
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