Market update

The Indian government’s sustained campaign for improving overall tax compliance through a carrot-and-stick policy was reflected again in the 2021-22 Union Budget, with a few material announcements that impact gold. 

Demand for gold loans, both through banks and non-banking financial companies (NBFCs) has grown in response to the economic impact of the COVID-19 pandemic. 

India has embraced online retailing across different categories. Digital and social activity plays an increasingly important part in the purchase journey for gold. 

Central bank reserves are typically constructed according to three guiding principles: safety, liquidity and return. The Covid-19 pandemic has reinforced the significance of these principles and, by extension, the importance of smart and sustainable reserve management. 

Following the launch of the AAOIFI Shari’ah Standard on Gold in 2016, we have engaged with Islamic banks and financial institutions to develop the market for Shari’ah-compliant gold-backed products. As part of this we undertook research to understand how investors view Islamic finance, their attitudes towards gold, and preferences for gold-backed products.

On 20 November, LBMA published for the first time weekly trading volume data through LBMA-i – its new reporting service, which delivers greater transparency and insight into the over-the-counter (OTC) gold and silver markets.

India, a nation that accounts for around a fifth of annual global gold demand, has a long history of gold-focused policies. These, however, have often distorted the market rather than achieving policymakers’ aims. Announcements in the Union Budget on 1 February 2018, however, suggest this might change.

Germany’s gold investment market has boomed in the past 10 years. In the face of successive financial crises and loose monetary policy, German investors turned to gold to protect their wealth.

A barrage of policy initiatives aimed at purging India of black money and instilling greater transparency rocked India’s economy last year, including its gold market. The most dramatic was the radical decision to demonetise over 15 trillion rupees, around US$220bn. 

Financial markets have fallen sharply in response to Donald Trump’s election as the 45th President of the United States. Equity markets are down notably in Asian and early European trading.