Synopsis
A report indicates that central banks and Gold ETFs will be pivotal in gold demand in 2025. Geopolitical issues and economic uncertainties are expected to influence prices, with the RBI continuing its gold accumulation trend. Despite challenges in jewellery demand, investment in physical gold remains strong, while silver shows volatility amid increasing industrial demand.Key Takeaways
- Central banks and Gold ETFs are key to gold demand in 2025.
- Geopolitical tensions will likely push gold prices higher.
- Gold ETFs in India saw significant inflows in 2024.
- The RBI has been a consistent net buyer of gold.
- Silver demand is high, but prices remain volatile.
New Delhi, March 16 (NationPress) Central banks and Gold Exchange Traded Fund (ETF) investors are projected to remain the primary catalysts for gold demand in 2025, according to a recent report.
Geopolitical tensions and economic uncertainties are anticipated to elevate gold prices, while the actions of central banks will significantly influence the market for this precious metal.
As highlighted in the Motilal Oswal Private Wealth report, gold has emerged as one of the leading asset classes in India for 2024, showcasing an impressive 21 percent year-on-year (YoY) return.
The Indian market has demonstrated robust investment interest in gold, driven largely by unprecedented inflows into gold ETFs.
In 2024, Indian gold ETFs recorded net inflows of Rs 112 billion, which contributed an additional 15 tonnes to their total holdings, culminating in 57.8 tonnes by year-end.
This surge signifies strong interest from both institutional and retail investors, as stated in the report.
The Reserve Bank of India (RBI) has also maintained its trend of gold accumulation, adding 72.6 tonnes to its reserves in 2024, raising the total to 876 tonnes.
This achievement marks the seventh consecutive year that the RBI has been a net buyer of gold, which now comprises 10.6 percent of its foreign exchange reserves.
Even though high prices have impacted jewellery demand, the investment appetite for physical gold, particularly bars and coins, has remained vigorous.
Motilal Oswal notes that while demand was muted in 2024 due to elevated prices, a gradual recovery is anticipated by mid-January, primarily driven by wedding season purchases. Nevertheless, price stability will be a crucial factor influencing this recovery.
On the silver front, the report points out a persistent supply deficit over the past four years, with demand consistently outpacing supply, thus sustaining silver prices.
Industrial demand for silver has been on a steady rise since 2020, reaching record highs, particularly fueled by manufacturing and industrial activities in China and potential growth in green technologies.
However, silver remains more volatile than gold, exhibiting price fluctuations akin to Indian equities.
Consequently, while gold is recommended as a long-term strategic asset for portfolios, silver is suggested for more tactical allocations.
