SBI's Gold Policy Call: Why India Must Define Its Golden Future Now

In a report authored by Dr. Soumya Kanti Ghosh, Group Chief Economic Advisor at SBI, it was noted that India's cultural affinity for gold, combined with its role as an investment asset and a hedge against inflation, makes it essential for the country to frame a clear, forward-looking gold policy.

"The time has now come to conceive a comprehensive policy on gold. It is important to define what is gold -- a commodity or money -- and how it is perceived by its ultimate consumer," Ghosh wrote in the report.

The report pointed out the stark difference between how gold is viewed in the East and the West.

In Western economies, gold is largely seen as public property shaped by centuries of wars and economic turmoil, while in Asian nations such as India, Japan, Korea, and China, gold continues to be regarded as private property -- a personal asset and a symbol of financial security.

Ghosh explained that this deep-rooted cultural connection to gold has kept Asian households as net buyers, even as the West's attitude toward gold has evolved.

He added that India's current approach, which focuses on reducing demand and recycling existing gold for productive use, should expand toward monetisation efforts that can positively influence future investments.

The report also proposed discussions around integrating gold into broader financial sector reforms -- potentially through instruments like gold-backed pension schemes -- and aligning such efforts with India's long-term goal of capital account convertibility.

India remains one of the world's largest markets for gold, with households cherishing it as a store of value, investors viewing it as a safe haven, and central banks increasing their holdings amid global uncertainty.

Gold prices have soared in 2025, rising over 50 per cent year-to-date (YTD), driven by geopolitical tensions, economic uncertainty, and a weakening US dollar.

After briefly dipping below $4,000 per ounce in October, gold prices climbed back above that mark in November.

The rising attractiveness of gold as an asset class has also boosted inflows into exchange-traded funds (ETFs).

Between April and September of FY25, inflows into gold ETFs jumped 2.7 times, and during the same period in FY26, they rose 2.6 times.

The net assets under management (AUM) of gold ETFs surged to ₹901.36 billion as of September 2025 -- marking a 165 per cent increase year-on-year.

The report further mentioned that the Pension Fund Regulatory and Development Authority (PFRDA) is considering allowing exposure to commodities like gold and silver within pension fund portfolios -- a move that could strengthen the role of gold in India's long-term investment landscape.

- IANS