Investors have shifted to safe-haven assets such as gold amid a weakening US dollar, global uncertainty, negative real rates, and rising geopolitical and financial risks, according to the Economic Survey
2025-26, which was tabled in Parliament today by Finance Minister Nirmala Sitharaman.
“Global policy uncertainty increased following the announcement (US tariffs), prompting investors to reduce their exposure to the US Dollar (USD) and seek safe-haven assets, such as gold,” the survey added.
The survey said that the prices of precious metals, both gold and silver, are likely to continue increasing due to their sustained demand as safe-haven investments amid global uncertainties, unless a durable peace is established and trade wars are resolved.
“Some commentators feel that the torrid pace set by gold and silver in 2025 may not be sustained. If they are correct, core inflation excluding precious metals may be higher, not lower,” it added.
The survey also highlighted that the global financial markets are grappling with the impact introduced by new technologies such as artificial intelligence (AI), citing the IMF’s Financial Stability Report (FSR) of Ocotber 2025, which notes that there is a higher likelihood of herding behavior in financial markets, as global investors use similar AI models.
The survey also underlined the rising bank credit growth with the major jump in personal loans. A significant factor contributing to this growth is a substantial rise in loans against gold jewellery, which have increased by 125.3 per cent (YoY), likely due to the increasing prices of gold, it added.
The survey mentioned that gold has remained the major import item in FY25 after petroleum crude, with these sectors accounting for over one-third of total imports. Meanwhile, the gold imports increased by 27.4 per cent year-on-year in FY25, driven by strong domestic consumption and a rise in gold prices.
The survey also highlighted that the gold component in Foreign Currency Assets (FCA) rose sharply to USD 117.5 billion as of 16 January 2026, compared with USD 78.2 billion at the end of March 2025. This increase reflects both valuation gains during a period of elevated global gold prices and a continued preference among central banks for diversifying into non-dollar reserve assets, it added.
The growing share of gold in reserves aligns with a broader international pattern where many emerging markets have increased gold holdings amid geopolitical uncertainty and shifts in the global interest-rate cycle.
