Business

IIE DIGITAL DESK : April 21: The onset of the new financial year and the approaching festive demand of Akshaya Tritiya, expectations are building that gold demand in India may see a fresh uptick. Amid this backdrop, financial experts and market analysts continue to debate whether gold remains a safe and profitable investment option, especially in the face of ongoing price fluctuations.

Motilal Oswal Financial Services, gold has delivered nearly a 10 percent rise in prices since the beginning of 2026. However, this upward trend has not been steady, with frequent volatility driven by global economic uncertainty, geopolitical tensions, and speculation around US interest rate policies. The report highlights that while short-term investment in gold may carry risks due to unpredictable price movements, the long-term outlook remains broadly positive.

Navneet Damani, Head of Commodity Research at Motilal Oswal Financial Services, noted that gold continues to be considered a reliable asset for investors in India. He explained that despite short-term instability, the metal has historically acted as a hedge against inflation and economic uncertainty, making it an attractive long-term investment option. He also pointed out the growing popularity of gold exchange-traded funds (ETFs) among investors who prefer more transparent and easily tradable instruments compared to physical gold.

Global demand trends further support this view. According to data from the World Gold Council, central banks across the world purchased approximately 860 to 870 tonnes of gold in 2025. Although this figure is slightly lower compared to 2024, it still indicates strong institutional demand for the precious metal. Analysts suggest that central bank buying continues to provide underlying support to global gold prices.

Rising prices have also impacted consumer behaviour in India. Market observers note that demand for gold jewellery has softened slightly due to higher costs, even during traditional buying seasons. Commodity analyst Manav Modi observed that while festivals like Akshaya Tritiya continue to drive demand, investors are increasingly shifting toward structured and transparent investment alternatives such as ETFs and digital gold.

Experts further suggest that in the short term, gold prices may experience minor corrections or consolidation phases. However, in the long run, several macroeconomic factors are expected to support the metal’s value. These include ongoing geopolitical instability, concerns over global economic slowdown, and potential interest rate cuts by major central banks. At the same time, a strengthening US dollar could create occasional downward pressure on gold prices.

Despite these mixed signals, the overall sentiment among analysts remains cautiously optimistic. The consensus is that while timing the market in the short term may be challenging, gold continues to hold its position as a dependable long-term investment asset, particularly in uncertain global financial conditions.