The Gold Market and COVID-19: An Indian Perspective

Abstract

Gold is seen as both a good portfolio diversifier and an inflation hedge asset. However, it can do well in both a deflationary and inflationary climate. Thus, gold has an important role to play in the current circumstances, since India, like other countries around the world, is dealing with the second wave of COVID-19. The study examined the developments that occurred in the global gold market and the Indian gold market during the COVID-19 pandemic. During the global pandemic, demand and supply dynamics in India, as well as gold price trends, were addressed. With the spread of COVID-19, pessimism and depression loom over the worldwide economy. The precautionary measures taken to limit this infection affected almost every sector, including the gold market. However, investors are increasingly turning to gold as a safe haven. Whereas high metal prices attracted investors, leading to substantial inflows into gold ETFs, consumer demand for gold, particularly for jewellery, fell. Consumer demand for gold in India increased significantly in the first quarter of 2021. As a result, gold has kept its status as a safe haven and has retained its sheen even during this pandemic, when the world economy has been hammered the hardest.