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All that glitters!
For decades, U.S. Treasuries served as the world’s preeminent safe-haven asset. That position is now being challenged, as gold has steadily assumed a more prominent role. Central banks collectively hold nearly $4 trillion in gold, exceeding foreign holdings of U.S. government debt for the first time since 1996. Over the same period, U.S. public debt has expanded 6x, while revenues have only 3x—highlighting growing structural imbalances and signaling a potential shift in the global macroeconomic regime. This trend reflects more than short-term risk aversion or portfolio diversification. It points to a broader transition away from a highly financialized global system toward one increasingly anchored in tangible assets, re-industrialization, and national security–driven economic policy.
📉 Gold prices
Gold is traded 24 hours a day somewhere in the world, with US financial markets playing a major role in price discovery. Gold often rises when stocks fall because it is seen as a safe haven, especially during wars, global crises, or periods of inflation fear, all of which tend to push gold prices higher—just as seen when gold reached a major high during the 2008 financial crisis. Gold prices are strongly influenced by the strength of the US dollar, with prices often rising when the dollar weakens, and they also react to interest rate changes by major central banks, which themselves are among the largest holders and buyers of gold. Unlike stocks or bonds, gold does not pay interest or dividends, but its relatively slow-changing mining supply helps keep it scarce, while jewelry demand—particularly in India and China—has a significant impact on prices. In addition, gold prices are affected by ETF buying and selling, speculation in futures markets that can cause short-term swings, recycling of old gold jewelry that influences short-term supply, and a small but steady level of technological demand from electronics and medicine. Over very long periods, gold has tended to hold its purchasing power.
Gold is priced by the sovereign in India, with 1 kilogram of gold equal to 32.15 troy ounces, and its purity measured in karats, where 24K represents 99.9% pure gold. Annual global gold production is roughly 3,000–3,500 metric tons, and remarkably, all the gold ever mined would fit into a cube about 22 meters on each side, while central banks alone hold around 35,000 metric tons worldwide, sometimes making purchases of hundreds of tons per year. Jewelry dominates demand at about 45–50% annually, followed by investment demand from bars, coins, and ETFs at roughly 25–30%, technology uses at around 7–10%, and recycling contributes about 25% of total supply. Gold ETFs collectively hold over 3,000 metric tons, futures contracts on COMEX represent 100 troy ounces each, and the smallest commonly traded gold bar weighs just 1 gram. Gold prices are sensitive to currency movements, as a 1% change in the US dollar index can trigger a noticeable opposite move in gold, and supply remains constrained since developing a new gold mine can take 10–20 years. Over centuries, an ounce of gold has often retained enough value to equal the cost of a high-quality suit.
📊 Recent Price & Market Stats
In late **January 2026, gold hit a record ₹1.83 lakh per 10 g in India, driven by safe-haven demand. Domestic gold prices climbed from about ₹8,000 per 10 g in 2006 to ~₹1.62 lakh per 10 g in 2025–26 — roughly 20× in 20 years. Gold prices roughly tripled over 3 years: ~₹60,000 in 2023 → ~₹75,000 in 2024 → ~₹95,000 in 2025 → ~₹1.62 lakh in early 2026.
📦 Import & Demand Figures
India’s gold imports in **2025 were about $58.9 billion — a record high. That import bill represented roughly ~9% of India’s total imports. Total gold imports by value have grown from ~$33.6 billion in 2018–19 to ~$48.8 billion in 2023–24. Annual Indian gold demand in 2025 is forecast to be 600–700 tonnes, the lowest in five years due to high prices. Gold’s long-term real return averages about 1–2% per year, with annual price volatility typically around 10–20%, lower than that of stocks, though prices have still experienced multiple historical drawdowns exceeding 20%.
📉 Jewellery vs Investment Demand
Jewellery consumption in India fell ~24% in 2025 to ~430.5 tonnes because prices soared. Meanwhile investment demand (coins, bars, ETFs) rose 17% to ~280 tonnes, the highest since 2013. In 2025, gold ETF inflows in India shot up 283% to ~₹429.6 billion (~$4.7 billion). Investment accounted for ~40%+ of total gold use in India in 2025 — unusually high relative to historical norms (~25%).
🪙 Cultural Impact
The total value of gold held by Indian households reached a record ~$3.8 trillion, about ~89% of India’s GDP in 2025. Overall gold consumption in India fell ~11% in 2025, even as coin and bar demand climbed. During Diwali/festive seasons, the India gold price can trade at a premium vs official rates — unofficial "grey market" prices sometimes exceeded ₹1.20 lakh per 10g. Even with prices high, jewellers still often calculate making charges as a % of gold price, meaning labour costs also rise with bullion prices.
📍 Import Duty & Policy Numbers
In 2024, India cut import duty on gold from ~15% to ~6%, the lowest in over a decade. Duty cuts led to an 18% rise in India’s gold demand in Q3 2024, reaching 248.3 tonnes in that quarter. Despite changes in duty GST remains 3% on gold in India. Import duties and taxes significantly affect local prices, as import duty alone has historically ranged from about 7–12%, while GST adds 3% on gold value plus 5% on making charges, often pushing Indian prices 10–15% or more above international levels.
📉 Consumer Behaviour
India typically consumes about 700–900 metric tons of gold each year, accounting for roughly 20–25% of global demand, with prices commonly quoted per 8 grams under the sovereign standard. Jewelry dominates India’s gold market, making up around 85–90% of total demand, while investment gold such as coins, bars, ETFs, and Sovereign Gold Bonds—issued in units of 1 gram—accounts for the remaining 10–15%. Since India imports over 90% of its gold needs, gold imports can represent 5–8% of the country’s total import value, and domestic prices closely track movements in the USD/INR exchange rate, with a ₹1 depreciation in the rupee potentially increasing gold prices by about ₹400–600 per 10 grams depending on global rates. Demand is highly price-sensitive, with a ₹1,000 rise per 10 grams capable of reducing short-term buying, yet seasonal factors matter greatly—wedding demand and festivals during peak months from October to December can lift local prices by 5–10%, especially as rural India, which accounts for nearly 60–65% of physical demand, steps up purchases. Gold ETFs in India are typically priced close to 99.5% purity, while 22K jewelry gold, at 91.6% purity, trades lower than 24K gold.
Notes
Also, I wrote about city-wise VC investments in India on my startup blog. Do read if you have time.
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