The buying behaviour of customers towards precious metals like gold and silver is changing as geopolitical tensions across the world remain high. Buyers are looking at the yellow metal not just as jewellery but also as a hedge against market fluctuations.
The investment demand in precious metals like gold has increased to 45% now from 28% earlier, said Surendra Mehta, Secretary of the India Bullion & Jewellers Association (IBJA), according to a report by CNBC TV18.
Mehta said that the sharp rise in gold and silver imports reflects a stark shift in household savings behaviour. Investors are treating these metals as financial assets instead of just jewellery, he was quoted as saying.
“People are moving from other asset classes to gold, which is now really called a safe haven asset,” Mehta said. He was speaking after the recently released trade data reported a steep increase in the import of metals like gold and silver.
While gold imports in January rose more than four times to over $12 billion, inward shipments of silver surged 127% during the same month to $2 billion. Experts have cited this as the main reason behind the widening of India’s trade deficit in January. The trade deficit during the month increased to a three-month high of $34.68 billion from $23.43 billion last year.
However, the surge in gold imports was primarily driven by a rise in prices rather than volume. Mehta said that fresh money is also coming into instruments like gold and silver ETFs, indicating that investors are looking at the metals as investments rather than consumption products.
Mehta said that it was not jewellery consumption that is behind the rising demand. “Jewellery sales in the organised and unorganised sectors are down, but investment demand is high,” he is quoted as saying, underlining the change in demand composition.
He also indicated that the trend may continue in the coming months owing to the wedding and festival season, and global trade and political uncertainty.
