For a long time, Indians used to splurge on gold. They are the world’s second largest consumers of gold after China. However, gold as an investment, may have finally taken shape in FY21. There were a number of reasons, and we will come back to that later. Let us first look at the chart of gold prices to set a backdrop.
Gold had been in the midst of a rally since late 2018 when the global markets had started becoming richly valued. Through 2019 and the first half of 2020, gold remained the best performing asset class. Geopolitical and economic uncertainty favours gold demand as investors consider it a safe haven in difficult times. From late 2019 to mid-2020, the demand for gold spurted due to the COVID pandemic which triggered the risk that global economies could slow down in tandem. However, things did change after August 2020 for gold.
