Indians celebrate Dussehra, Dhanteras, and Diwali festivals with great fervour. At this time, buying gold is considered auspicious as it is believed to bring wealth and prosperity to people’s lives. The yellow metal is also considered a safe haven during economic uncertainties or ready cash in times of financial hardship. So, no wonder that India has been the world’s second-largest gold consumer after China. However, when considering gold for investment purposes, it is vital to understand whether the festive season is the right time to buy gold when the demand skyrockets and the price increases or if it should wait until the demand and the prices ebb.

Amol Joshi, founder of Plan Rupee, a financial planning and investment firm, says, “People buy gold jewellery based on a special occasion or festival, but for gold as an investment, it is best to take exposure systematically via regular monthly investments. This will also (help) avoid gold price spike typically seen during festivals due to higher demand.”

Buying jewellery is not an investment but a wearable commodity. It is often confused with investments, as people want to fulfil the two objectives through a single purchase.

Also Read: Why Gold Is Considered A Good Investment: 5 Things To Know

Shweta Jain, founder of Investography Pvt. Ltd, an investment firm, agrees and says, “Whilst gold is considered a safeguard against inflation, it also means that it's a safeguard against events that are not in our control be it pandemic or war. With global uncertainty and geopolitical tensions, gold does come across as a safe haven. And festival time is a good time to spend/save on something that's shiny, one can wear or own and this is a purchase which whilst considering a spend, is also an investment.

Gold’s Recent Performance:

The import duty on the yellow metal has been reduced from 15 to 6 per cent in July this year. According to the World Gold Council’s September report, gold gained 4.6 per cent in September and 27 per cent year-to-date, as of September 30, 2024.

On October 14, gold was trading at Rs 78,700 per 10 grams, an all-time high in Delhi. According PTI, the spike is due to the demand from jewellers, traders and stockiest in the domestic market.

Global developments, like the middle east tension, rate cuts by the US Federal Reserve, and volatility in the domestic market have made gold even more attractive. The volatile market coupled with noticeable gold returns has made this metal a preferred investment instrument.

Is Festive Season The Right Time To Buy Gold?

When it comes to investing in gold, what is the best time? Should you invest in the non-festive season, when the demand is low? Joshi concurs, “This is the correct approach to benefit from demand and supply mismatch during a lean or off-season period. Gold investment or purchase should be treated like any other purchase where you will buy when prices are low.”

However, buying gold for cultural reasons is another matter. So, if jewellery is not on the shopping list, one can buy gold during the off season.

What Are The Different Modes To Invest In Gold?

One can invest in gold through instruments like sovereign gold bonds (SGBs), Gold Exchange-Traded Funds (ETFs), Gold Mutual Funds (MF), and Digital Gold.

“SGBs scored well on all the parameters with the added bonus of annual interest of 2.50 per cent. However due to the lack of a new supply of SGBs, be mindful of the premium that you will end up paying while buying in a secondary market, that may eat into your returns”, says Joshi. One can buy SGBs when the government launches an issue at the price RBI announces or from the secondary market anytime at the prevailing market rates.

Jain opines, “It's a good idea to invest in gold ETFs as well if one isn't emotional about holding gold as there would be costs involved in physically holding it as well.”

Joshi adds that most investors prefer the simplicity and convenience of buying gold online, such as Gold ETFs and Gold MFs. It is easy to start gold MF SIP, like any other MF scheme. One can have around 10 per cent exposure of their financial assets to gold and precious metals.