Page 26 - Bullion World Volume 4 Issue 11 November 2024

Bullion World | Volume 4 | Issue 11 | November 2024
All that

Glitters is

GOLD

Ms Jahnavi
Economist, Bank of Baroda

IMF’s deputy MD termed gold as a ‘politically neutral 2024). China is one of the biggest consumer of yellow
safe asset, insulated from sanctions and seizure’. metal, however, the demand for gold has weakened
Amongst asset classes, gold remains one of the safe recently due to price sensitivity on account of slowdown
haven for the investors amidst the growing uncertainty, in economic activity.
market volatility, a source of diversification and serves
as a hedge against inflation during any financial or Gold Reserves: There has been a growing demand for
geopolitical risk. gold and a major chunk is utilized in jewellery, towards
investment purposes such as bars, coins and ETF
This has been evident from the data, during the global and with Global Central Banks. It serves as significant
financial crisis back in the year 2008 and 2009, the gold component in the form of reserves for central banks.
prices skyrocketed to 32% in FY08 and 22% in FY09. According to the World Gold Council report, central
Notably, during the pandemic period (Covid-19), gold banks have purchased a record amount of gold totaling
prices accelerated by 25% in FY21 reaching the US$ 1037 tonnes in CY23, the second highest since CY22 (at
1825/troy ounce mark. Post the crisis, the prices largely 1082 tonnes). The gold holding across the central banks
remained steady and edged up again on the back of have picked up in the span of the last 3-years. The US
Russia-Ukraine war. A similar phenomenon has been continues to hold the largest amount of gold reserves (in
witnessed this year, the prices have soared by 25.4% in tonnes) across the globe. With the focus shifting towards
FYTD’25 compared with an increase of 8.9% last year. more gold buying, these can turn out to be early signs
This is attributable to escalating geopolitical tensions due of a possible de-dollarization trend, amidst the spur in
to the ongoing conflict in Middle East. Given the evolving global instability.
conditions in the global environment, the prices currently
stand at an all-time high mark at US$ 2749 (as of 22-Oct

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