Gold may top Rs20,000, silver Rs35,000 by Diwali

From the festival season of 2009 to the one just coming up, gold has risen 25% from Rs15,100 (per 10 grams) to Rs18,910. Silver rose more — 28%, from Rs24,040 per kg to Rs30,785.
Experts predict prices will rise more by Diwali, which is on November 5-6.

Prithviraj Kothari, director at Riddhi Siddhi Bullion, a company that offers a trading platform in precious metals, expects silver to run up to Rs35,000 per kg, and gold to Rs20,000-21,000 by the festival of lights. “The global uncertainty and loss of faith in the dollar will lead people to invest in gold,” Kothari said.

But those looking to buy now should wait for prices to fall, he advises. “We expect the prices of silver and gold to fall to Rs28,500 and Rs18,300-18,500 in 10-15 days.”

Kuljeet Kataria, vice-president (commodities), Motilal Oswal Commodities Broker, expects a 10% rise in gold prices from the present levels to around Rs20,800 in the next three months.

Will investing in silver be a better option since it has been running faster than gold?

“Silver prices have increased because there was higher demand for base metals. But I do not expect this trend to continue going forward. Silver is used in a lot of industries and follows copper, zinc, etc. But as base demand will be slower and the macroeconomic picture remain dull, people will gravitate to other asset classes; so investments should be made in gold,” advises Kataria.

“The thing with silver is that when it moves up, it does so sharply. So it’s riskier because of greater volatility, unlike gold.”

So how should you buy? Silver can be bought in coin or bar forms, while gold can be bought in the form of coins.

Alternatively those who have a demat account for holding shares can buy gold in units via the stock exchanges, where seven mutual funds — Benchmark, HDFC, Kotak, SBI, Reliance, Quantum and UTI Mutual Funds — offer gold exchange traded funds. These can be purchased from as low as 0.5 gram to 1 gram per unit.

In case you are looking to buy gold jewellery then there is a service offered by the Gems and Jewellery Federation of India to know the prices of 22- and 23-karat gold via SMS. Just SMS “GOLD RATE” to 575758.