Gold Price Outlook: Can Indian Households Still Rely on Gold as a Trusted Asset?

Gold Prices Fall Amid Geopolitical Tensions, but Indian Households Remain Trustful

Gold has long been a staple in Indian households, serving as a store of wealth, cultural asset, and financial safety net. However, the recent 8% drop in gold prices since the U.S. and Israel launched strikes on Iran in late February has led to speculation about the underlying trust in the asset. Despite this short-term volatility, a recent report by Axis Securities highlights that the current global macro environment continues to favor gold, regardless of the economic cycle.

The brokerage notes that gold has evolved beyond being a passive hedge to becoming a "high-growth safe haven," supported by structural shifts such as rising institutional accumulation and changes in global reserve allocation. Notably, for the first time, the total value of gold held by central banks has surpassed their U.S. Treasury holdings, signaling a deeper shift in how gold is perceived globally.

In India, this evolving global narrative is translating into continued trust, albeit through new channels such as exchange-traded funds (ETFs) and financial investments rather than physical gold. Domestic flows provide one of the clearest indicators of this trust. According to Mirae Asset Mutual Fund, India has emerged as a key stabilizer of gold demand, particularly through financial investments.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Domestic gold ETFs recorded ₹31,561 crore of inflows in Q1 FY26, one of the strongest quarters on record, driven by geopolitical risk, equity volatility, and inflation concerns. Even as gold ETF assets under management declined in March 2026 due to price corrections, flows remained positive, indicating that Indian investors are allocating strategically rather than reacting to short-term market movements.

Globally, too, gold continues to draw strong institutional interest. Central banks remain a major source of demand, providing a structural floor to prices. Mirae Asset Mutual Fund further noted that central banks continue to provide a structural demand floor, with net purchases of ~863 tonnes in the year 2025 and expected buying of 750-850 tonnes in 2026, well above historical averages.

Geopolitical uncertainties, from tensions in the Middle East to ongoing global conflicts, have further strengthened gold's appeal as a hedge against tail risks. These factors continue to influence Indian household behavior, as investors seek stability amid volatility in equities and other asset classes.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

While gold prices have seen short-term volatility, the broader outlook remains supported by strong structural drivers. Mirae Asset Mutual Fund pointed out that recent corrections were largely technical and liquidity-driven, with medium-term fundamentals remaining intact. Continued central bank buying, sustained ETF demand, and persistent geopolitical risks are expected to support gold going forward.

From a price perspective, Axis Securities expects domestic gold prices to move toward ₹1,70,000-₹1,85,000, implying a potential upside of 10%-15% from current levels. For Indian households, the shift is not away from gold but toward more financialized ways of holding it. The preference for ETFs and other investment formats indicates a transition in behavior, not a decline in trust.