New Delhi, March 3, 2025 — Chief Economic Advisor (CEA) V Anantha Nageswaran emphasized that gold will remain a key asset for investors, offering significant portfolio diversification, and its importance is likely to increase in the years ahead. Speaking at the IGPC-IIMA Annual Gold and Gold Markets Conference 2025, Nageswaran highlighted the enduring value of gold beyond its cultural and religious significance, asserting its critical role as a store of value.
Nageswaran noted that gold’s relevance will persist, especially until a new international monetary system emerges to replace the current “international monetary non-system.” However, he acknowledged that predicting when such a transformation will take place is challenging.
Gold's Performance and Growing Importance
Gold has seen a substantial rise in value, increasing by more than USD 200 per ounce—an 8% jump—over the past three months, reaching USD 2,860 per ounce. This comes at a time when Indian stock markets have fallen by over 8%. Since 2002, the precious metal’s value has surged nearly tenfold, from approximately USD 250-290 per ounce.
In the Indian market, gold prices have also seen an upward trend, with the cost of 10 grams of gold touching Rs 85,000. As a net importer of gold, India’s consumption and reliance on gold for investment continue to be pivotal.
A Long-term Vision for Gold in India
Nageswaran emphasized the need for India to explore ways to productively deploy its vast gold reserves, without compromising its cultural and religious importance. "The challenge lies in balancing gold’s role as a store of value while addressing its economic potential," he said. He pointed out that while gold remains significant to many Indians, policy decisions must take into account the broader significance of this asset class.
Referring to India’s previous efforts to monetize gold, Nageswaran reminded policymakers to learn from past experiences. In 2015, the Indian government introduced the Gold Monetisation Scheme, allowing citizens to deposit gold with banks and earn interest. This initiative aimed at reducing India’s reliance on gold imports by encouraging the formalization of the gold market.
Gold as a Symbol of Policy Discipline
In his address, Nageswaran also underscored that gold symbolizes more than just financial stability. It represents policy discipline and investor responsibility. He observed a growing tendency among both policymakers and investors to expect rising asset prices without understanding the inherent risks involved. “The financial markets are a two-way street,” he remarked, highlighting that policy relief becomes a constant demand when markets decline.
Global Debt and Inflation Concerns
Nageswaran pointed out the rising global debt-to-GDP ratio, which has reached alarming levels in many countries. High levels of debt lead to the crowding out of funds for productive investments, as more resources are needed to service the debt. This, he warned, may lead governments to use inflation as a means of reducing the real value of debt, which further underscores gold’s importance as a hedge against inflation.
“The fear of inflation remains, and with the ongoing consequences of policy decisions made since 1973, gold will continue to hold significant relevance in the global financial landscape,” Nageswaran added.
India’s Fiscal Outlook
Nageswaran also provided insights into India’s fiscal health, noting that under the Fiscal Responsibility and Budget Management Act, 2003, the Centre's debt-to-GDP ratio is expected to fall to 56.1% in FY26, down from 57.1% in FY25. Meanwhile, India’s GDP growth forecast stands at 6.5% for FY25, with an expected range of 6.3-6.8% growth in the following fiscal year.
As the global economic landscape evolves, gold’s role in investment portfolios is set to remain vital, with its ability to act as a safe haven against inflation and market volatility becoming increasingly important.
Nageswaran noted that gold’s relevance will persist, especially until a new international monetary system emerges to replace the current “international monetary non-system.” However, he acknowledged that predicting when such a transformation will take place is challenging.
Gold's Performance and Growing Importance
Gold has seen a substantial rise in value, increasing by more than USD 200 per ounce—an 8% jump—over the past three months, reaching USD 2,860 per ounce. This comes at a time when Indian stock markets have fallen by over 8%. Since 2002, the precious metal’s value has surged nearly tenfold, from approximately USD 250-290 per ounce.
In the Indian market, gold prices have also seen an upward trend, with the cost of 10 grams of gold touching Rs 85,000. As a net importer of gold, India’s consumption and reliance on gold for investment continue to be pivotal.
A Long-term Vision for Gold in India
Nageswaran emphasized the need for India to explore ways to productively deploy its vast gold reserves, without compromising its cultural and religious importance. "The challenge lies in balancing gold’s role as a store of value while addressing its economic potential," he said. He pointed out that while gold remains significant to many Indians, policy decisions must take into account the broader significance of this asset class.
Referring to India’s previous efforts to monetize gold, Nageswaran reminded policymakers to learn from past experiences. In 2015, the Indian government introduced the Gold Monetisation Scheme, allowing citizens to deposit gold with banks and earn interest. This initiative aimed at reducing India’s reliance on gold imports by encouraging the formalization of the gold market.
Gold as a Symbol of Policy Discipline
In his address, Nageswaran also underscored that gold symbolizes more than just financial stability. It represents policy discipline and investor responsibility. He observed a growing tendency among both policymakers and investors to expect rising asset prices without understanding the inherent risks involved. “The financial markets are a two-way street,” he remarked, highlighting that policy relief becomes a constant demand when markets decline.
Global Debt and Inflation Concerns
Nageswaran pointed out the rising global debt-to-GDP ratio, which has reached alarming levels in many countries. High levels of debt lead to the crowding out of funds for productive investments, as more resources are needed to service the debt. This, he warned, may lead governments to use inflation as a means of reducing the real value of debt, which further underscores gold’s importance as a hedge against inflation.
“The fear of inflation remains, and with the ongoing consequences of policy decisions made since 1973, gold will continue to hold significant relevance in the global financial landscape,” Nageswaran added.
India’s Fiscal Outlook
Nageswaran also provided insights into India’s fiscal health, noting that under the Fiscal Responsibility and Budget Management Act, 2003, the Centre's debt-to-GDP ratio is expected to fall to 56.1% in FY26, down from 57.1% in FY25. Meanwhile, India’s GDP growth forecast stands at 6.5% for FY25, with an expected range of 6.3-6.8% growth in the following fiscal year.
As the global economic landscape evolves, gold’s role in investment portfolios is set to remain vital, with its ability to act as a safe haven against inflation and market volatility becoming increasingly important.
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