Gold investment market and financialisation

Jul 15, 2023

The World Gold Council report on India gold market series said, India is one of the world’s largest gold bar and coin markets. Investment demand for gold is driven by its safe-haven appeal and the ability to convert these products into jewellery at a later stage.

Over the last decade the government’s focus on bank the unbanked has witnessed tremendous success. But the subsequent increased use of banking services and the heightened awareness of financial products have created headwinds that could weigh on future gold bar and coin demand.

The government has also taken steps to mobilise the huge ~US$1.4tn private stock of gold in India, most recently with the launch of the Revamped Gold Monetisation Scheme (R-GMS). The gold loan market has flourished with a total of 2,950-3,350t being used as collateral.

Now, spot gold exchanges need to develop gold-backed financial products to provide impetus to the financialisation of gold in India. The government has introduced policies to improve the country’s gold-related infrastructure – including the establishment of domestic gold spot exchanges and plans for an India International Bullion Exchange – which are intended to make meaningful progress towards monetising India’s stock of gold.


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