GOLD RUSH

GOLD PRICES HAVE VAULTED IN INDIA, CLIMBING NEARLY 91% OVER THE PAST THREE YEARS, WHILE SILVER HAS GAINED 79%. WHAT'S FUELLING THE BULLION BOOM?

- BY RIDDHIMA BHATNAGAR

IN A WORLD riddled with geopolitical turmoil, macroeconomic jitters and shifting policy winds, two age-old hedges are back in the spotlight: gold and silver. Over the past year, both metals have seen a formidable rally, rekindling investor interest, reshaping portfolio strategies and challenging the returns of even mainstream equity indices.

Over the past three years, gold and silver have delivered returns of 91% and 79%, respectively, while the benchmark Nifty 50 equity index has generated 62% returns.

A significant contributor to this rally has been the return of the safe-haven trade. From the prolonged Russia-Ukraine war to the flareups in West Asia, most notably the brief but intense war between Israel and Iran, the fragile geopolitical order has given rise to a widespread sense of anxiety.

However, a big change this time is that more investors and central banks have added gold in their portfolio even as there are signs that dollar holdings have declined. This is, perhaps, not surpris ing considering the impact of US President Donald Trump's trade policies. The US Dollar Index Futures have dropped 12% till June this calendar year.

“Markets are being driven by fear again, and gold thrives at such times. The Iran-Israel conflict, though short-lived, had a disproportionate impact on market psychology,” says Naveen Mathur, Director of Currency & Commodities at wealth management firm Anand Rathi Wealth.

Another major pillar of support is sustained purchases by central banks and institutions. Despite a slight slowdown in monthly purchases, central banks added a robust 243 tonnes of gold in Q1 2025 above the five-year average of 196 tonnes. China, India and Russia were the key players, though recent months have seen more measured accumulation, says Modi. Importantly, no major central bank has turned net seller, underlining gold's role as a store of value amid currency and policy uncertainties, he adds.