India: All That Glitters Is Gold

研报英文原文证据摘录

India: All That Glitters Is Gold

importantly—gold prices have become

Gold prices (deflated by core CPI) 0.3 -0.8* the dominant driver of the gold import bill. Historically,

Real GDP 0.7 2.5 the general equilibrium offset was meaningful: higher prices

Source: WCG, JPM estimates. *** p<0.01, ** p<0.05, * p<0.15. reduced volumes, dampening the impact of higher gold prices

All variables in first difference of natural log, real and seasonally adjusted quarterly terms. on India’s gold import bill. With demand increasingly price-

inelastic, that offset has weakened. As a result, the level of

In turn, the growing share of investment demand appears to

gold prices now plays a larger role in determining import val-

be a response to heightened global uncertainty. Gold price

ues, because volumes do not adjust downward as much when

dynamics often track broader risk sentiment and can reflect

prices rise.

nonlinear risk processes, rather than simple supply–demand

fundamentals. Consistent with this, prior studies show that

Against this backdrop, the recent downtrend in gold prices—

during episodes of elevated uncertainty—such as financial

driven in part by the repricing of the expected Fed funds

crises—gold demand tends to be relatively inelastic (Mandel-

path—bodes well for India’s current account deficit. For

brot and Hudson, 2004 and Baftijari et al., 2025).

FY27, assuming an average gold price of $4,000/

oz (vs. $3,936/oz in FY26), gold imports are likely to remain

Gold imports driven by prices; policy effica- broadly flat at around ~$70bn.

cy may be limited

Despite investment’s rising share of India’s gold demand,

total annual demand, barring the pandemic, has remained rel-

atively stable—around 700–800 metric tons—even as it has

become more price-inelastic.