New Delhi, Nov 5: As gold prices hit record highs, a State Bank of India (SBI) study has called for a comprehensive gold policy in India, citing the country’s status as one of the world’s largest bullion markets. The report, Coming Of (A Turbulent) Age: The Great Global Gold Rush, notes that prices have surged over 50% in 2025, driven by geopolitical tensions, economic uncertainty, and a weakening US dollar, briefly dipping below USD 4,000 per ounce in October before rising again.
India’s domestic gold supply is limited, with imports accounting for around 86% of total supply in 2024. Consumer demand rose to 802.8 tonnes last year, second only to China. The study emphasizes the cultural affinity for gold, its role as a safe-haven investment, and its impact on the USD-INR exchange rate, which shows a strong correlation of 0.73.
The SBI report highlights that India lacks a long-term gold policy, contrasting with countries like China, which manage trading, storage, and valuation through coordinated national policies. Past Indian measures largely aimed to reduce physical gold consumption. The report recommends defining gold as a commodity or money, monetizing existing gold holdings, and exploring instruments like gold-backed pensions and Sovereign Gold Bonds (SGBs), which have reduced imports but increased government debt.
Gold’s rising prominence as an asset class is evident in surging inflows into ETFs, which grew 2.6–2.7 times in FY26, raising assets under management to Rs 901.36 billion. RBI’s gold reserves increased from 9.1% in FY24 to 15.2% in FY26 by October, largely due to valuation gains, though physical additions remain modest.
Limited domestic mining—just 1,627 kg in FY25—keeps India reliant on imports, though new mines in Odisha, Madhya Pradesh, and Andhra Pradesh could ease pressure. The study underscores the need for a comprehensive, long-term gold policy to support localization, financial reforms, and better integration of gold into India’s economic strategy. (PTI)
