Gold and silver surge signals global risk.

The Economic Survey 2025–26 points to the sharp rise in prices of precious metals such as gold and silver as a reflection of growing global financial and geopolitical uncertainty, while warning that global trade is shaped by security concerns rather than multilateral efficiency.

The Survey notes that gold prices rose sharply during 2025 amid a weakening US dollar, expectations of persistently negative real interest rates, and heightened geopolitical and financial tail risks.

It treats the rally in precious metals, including silver, as a market response to rising global fragility and investor preference for safe-haven assets during periods of uncertainty

While highlighting gold’s role as a barometer of global risk sentiment, the Survey also explicitly excludes gold and silver from measures of core inflation, indicating that price movements in these metals are driven more by global financial conditions than by domestic demand-supply dynamics.

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It says subdued core inflation excluding gold and silver points to strengthening supply-side conditions in the domestic economy

The Survey links the surge in precious metal prices to broader structural shifts in the global system. It states that financial markets are pricing in higher uncertainty as geopolitical competition intensifies, trade frictions increase, and concerns grow over leveraged investments, particularly in technology and artificial intelligence-related infrastructure

On trade, the Survey observes that global trade policy is no longer guided primarily by efficiency or multilateral rules. Instead, it says trade is influenced by political and security considerations, with greater use of tariffs, sanctions and counter-measures. This shift, it adds, has made global trade more fragmented, less predictable and more prone to episodic shocks

The Survey cautions that such an environment raises risks for capital flows, exchange rates and external balances, particularly for economies that run persistent trade deficits in goods. It notes that India’s services exports and remittances provide partial insulation, but are not a substitute for building strong manufacturing-based export ecosystems that underpin long-term trade and currency stability.

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