Gold has moved beyond its ornamental and ceremonial roles to reassert itself as a strategic investment. Recent trends suggest it could be entering a period of sustained importance not seen in decades.
After the Second World War, central banks were heavy gold accumulators, amassing nearly 38,000 tonnes by the early 1970s. That changed after the US severed the dollar’s link to gold in 1971, prompting several countries to sell.
Since the 2008 financial crisis, however, central banks have been steadily rebuilding reserves. Current holdings stand at 36,000–37,000 tonnes, close to historic highs, with central banks now accounting for almost a third of annual global gold demand.
Yet gold still represents only 17 percent of total central bank reserves, far below the 45–55 percent range seen between the 1950s and 1970s. That gap leaves considerable room for further long-term buying, which is generally steady and less sensitive to short-term price moves.
Fresh tariff measures — including a 50% US duty on all imports from India — have reignited fears of a global trade war. Political frictions and economic uncertainty are pushing investors towards safe-haven assets.
Gold’s role as a hedge against inflation, currency volatility, and geopolitical risk has come to the fore once again. Prices hit about $3,300 an ounce in July 2025, nearing the inflation-adjusted peak from the 1980s. In India, prices have crossed ₹1 lakh per 10 grams, yet demand remains resilient.
While gold’s cultural significance remains strong, more Indians are treating it as a financial instrument. Sovereign Gold Bonds, Gold ETFs and other investment products are gaining traction. Assets under management in gold ETFs have topped ₹65,000 crore this year, with inflows of ₹19,000 crore.
Even at elevated prices, many view dips as buying opportunities — a sign of gold’s shift from purely emotional to strategic asset allocation.
Gold’s recent rally has largely brought it back to its inflation-adjusted 1980 level, rather than creating an unprecedented boom. But with central bank accumulation, persistent inflation, peaking interest rates, and unsettled global trade, the drivers for continued strength remain in place.
For Indian investors, the message is clear: gold is once again acting more like a global currency than a commodity. If current trends hold, we may be witnessing the beginning of a renewed era of gold dominance — not just a short-lived spike.
