New Delhi: As gold prices soar to new heights, a study on Wednesday made a case for a comprehensive policy for the yellow metal as India is one of the world’s largest bullion markets, influenced by a cultural affinity for the shiny metal and investment demand.
Gold price has been reaching new heights driven by geo-political tensions, economic uncertainty, and a weakening US dollar, said the report titled ‘Coming Of (A Turbulent) Age: The Great Global Gold Rush’ by the State Bank of India’s Economic Research Department.
The year-to-date price has increased by over 50 per cent in 2025. The price came down to below USD 4,000 per ounce for a few days in October, but again moved above USD 4,000/oz in November.
The report noted that the domestic supply of gold is only a fraction of the total gold
supply in India, with imports contributing around 86
per cent of the total supply in 2024 as per the World Gold Council estimate.
India is one of the largest gold markets, influenced by cultural affinity for shiny metal, investment demand and other economic factors, including a hedge against inflation and a safe-haven asset, it noted.
Total consumer demand for gold in India increased to 802.8 tonnes in 2024, which was 26 per cent of the global gold demand, placing India at second rank, next to China with a consumer demand of 815.4 tonnes.
“Cherished by households, cheered by investors, hoarded by central banks and feted by speculators, the recent chequered journey of the shiny metal has been straight out of a story book, but also cautions as a fear gauge of the tempest waiting on the sidelines. Time for India to have a dedicated long-term gold policy that supports localisation,” the report said.
It said the gold price has a direct impact on the USD INR exchange rate too, owing to the country’s huge dependence on gold imports. The two are highly correlated, around 0.73, implying that higher gold prices are associated with Indian rupee depreciation, though the average import quantum makes it not a too significant factor.
SBI study said China has a national policy on gold, which has a specific purpose. It has a comprehensive approach to reshaping how gold is traded, stored, valued, and used in international commerce. It represents a coordinated approach to addressing several economic and geopolitical priorities simultaneously.
On India’s gold policy till now, it said, “if one were to take an objective view of the policy discussions on gold since 1978, one finds that the major thrust has been to wean away the masses from physical gold. They were therefore only short-term in horizon”.
“The time has now come to conceive a comprehensive policy on gold, and for such it is important that one defines what gold is (commodity or money) and how gold is perceived by its ultimate consumer,” the report said.