New Delhi, Nov 5 (NationPress) The State Bank of India (SBI) Research has urged for a well-structured long-term strategy concerning gold, emphasizing the necessity to clarify gold’s function in the economy—whether it is viewed as a commodity or money—and its perception among Indian consumers.

In a report written by Dr. Soumya Kanti Ghosh, Group Chief Economic Advisor at SBI, it was highlighted that India’s profound cultural ties to gold, alongside its status as an investment vehicle and a safeguard against inflation, render it imperative for the nation to devise a clear and progressive gold policy.

“The moment has arrived to formulate a comprehensive gold policy. It is crucial to determine if gold is perceived as a commodity or money and how it is regarded by the end consumer,” Ghosh noted in the report.

The report underscored the stark contrasts in the perception of gold between the East and the West.

In Western nations, gold is primarily seen as public property, influenced by centuries of conflicts and economic challenges, while in Asian countries such as India, Japan, Korea, and China, gold is viewed as private property—a personal asset and a symbol of financial security.

Ghosh elucidated that this ingrained cultural bond with gold has kept Asian households as net buyers, even as Western perspectives on gold have shifted.

He suggested that India’s current strategy, which aims at curtailing demand and recycling existing gold for productive purposes, should evolve to include monetization efforts that can positively affect future investments.

The report also recommended deliberations on incorporating gold into broader financial sector reforms—potentially via instruments like gold-backed pension schemes—and aligning these initiatives with India’s long-term goal of capital account convertibility.

India remains one of the globe’s largest gold markets, with households valuing it as a store of wealth, investors viewing it as a safe haven, and central banks increasing their reserves amid global volatility.

Gold prices have surged significantly in 2025, increasing over 50% year-to-date (YTD), propelled by geopolitical tensions, economic instability, and a declining US dollar.

After briefly dipping below $4,000 per ounce in October, gold prices rebounded above that threshold in November.

The growing appeal of gold as an asset class has also led to heightened inflows into exchange-traded funds (ETFs).

From April to September of FY25, inflows into gold ETFs surged 2.7 times, and during the same timeframe in FY26, they grew 2.6 times.

The net assets under management (AUM) of gold ETFs skyrocketed to ₹901.36 billion as of September 2025—marking a 165% year-on-year increase.

The report further mentioned that the Pension Fund Regulatory and Development Authority (PFRDA) is contemplating allowing exposure to commodities like gold and silver within pension fund portfolios—a move that could fortify the role of gold in India’s long-term investment ecosystem.