Gold has re-emerged as a central element in India’s economic framework, serving not only as a traditional safe asset but also as a key stabilising force amid growing global uncertainty. The Economic Survey notes that the sharp rise in gold prices is not simply part of a normal market cycle, but reflects deeper shifts in global risk sentiment, real interest rate expectations, and declining confidence in conventional financial instruments.
The Survey points out that global markets are already reacting to increasing fragility. Throughout 2025, gold prices climbed dramatically from $2,607 per ounce to $4,315 per ounce, supported by a weakening US dollar, expectations of prolonged low real interest rates, and heightened geopolitical tensions. This upward trend extended into early 2026, with gold reaching $5,101.34 per ounce by January 26, highlighting persistent demand for safe-haven assets.
Rising gold prices have also influenced India’s inflation trends. While headline inflation eased significantly during FY26, core inflation remained relatively firm. The Survey explains that this stickiness was largely due to elevated precious metal prices rather than widespread price pressures across the economy.
Gold has also strengthened India’s external financial position. Its role within the country’s foreign exchange reserves expanded notably during FY26. Although foreign currency assets saw a slight decline, the value of gold reserves increased substantially from $78.2 billion at the end of March 2025 to $117.5 billion by January 16, 2026.
The Survey places gold’s renewed importance within a more fragmented global order, where trade and finance are increasingly shaped by geopolitical considerations. Reflecting this trend, domestic precious metal prices surged on January 29, with MCX gold and silver futures hitting record highs amid a softer dollar, strong demand, and expectations of future US rate cuts.