New Delhi: State Bank India (SBI) Research report urged a clear long-term policy on gold to guide its role in India’s economy. The report emphasized defining whether gold functions primarily as a commodity or as money and understanding how Indian consumers perceive it.
In a report authored by Dr. Soumya Kanti Ghosh, SBI’s Group Chief Economic Advisor, India’s strong cultural affinity for gold was highlighted. He noted that gold’s dual role as an investment and hedge against inflation makes a clear, long-term gold policy essential for the country.
Ghosh also emphasized understanding how Indian consumers perceive gold. This clarity, he argued, is critical for effective economic planning and investment strategies.
The report highlighted the stark differences between Eastern and Western perceptions of gold. In the West, gold is largely public property, shaped by centuries of wars and economic turmoil. In contrast, Asian nations such as India, Japan, Korea, and China view gold as private property, a personal asset, and a symbol of financial security.
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Furthermore, Ghosh explained that this deep cultural connection keeps Asian households as net buyers, while Western countries have gradually reduced their gold holdings. He argued that India’s current approach—focusing on demand reduction and recycling—should expand toward monetisation strategies to encourage future investments.
The report also proposed integrating gold into broader financial sector reforms. For instance, instruments like gold-backed pension schemes could align with India’s long-term goal of capital account convertibility. Such measures would increase gold’s contribution to the national investment ecosystem.
India remains one of the largest global markets for gold. Households cherish it as a store of value, investors treat it as a safe haven, and central banks continue increasing holdings amid global uncertainty. Consequently, gold remains a critical component of financial stability and wealth preservation.
Gold prices have surged over 50% year-to-date in 2025 due to geopolitical tensions, economic uncertainty, and a weakening US dollar. After dipping below $4,000 per ounce in October, prices climbed back above that level in November.
This rising attractiveness has also driven inflows into gold ETFs. Between April and September FY25, inflows jumped 2.7 times, while in FY26 they increased 2.6 times. As a result, gold ETFs’ AUM rose to ₹901.36 billion by September 2025, marking a 165% year-on-year increase.
Finally, the report noted that the Pension Fund Regulatory and Development Authority (PFRDA) is considering allowing gold and silver exposure in pension fund portfolios. This move could strengthen gold’s role in India’s long-term investment framework and support household wealth creation.