A Review on Gold Quest in the Investment Portfolio by Indian Investors

The perception about gold in India has come a long way from the days when its main function was to merely adorn and act as a status symbol. The emotional investment in the metal was so huge that parting with it seemed unthinkable. Consequently, it seldom yielded worthwhile returns. Now, however, it is becoming clear that an increasing number of Indians are realizing that gold deserves a place not just in the cupboard at home or the bank locker, but also in their investment portfolio. Gold purchases in India accounted for 32 per cent of the global total in 2010. However, in the near term, gold consumption in India is likely to increase marginally by 1.7 per cent during the year 2011 to touch around 980 tonnes compared to 963.1 tonnes consumed in 2010. Gold jewelry represented around 75 per cent of the total Indian gold demand in 2010, the remainder accounted for by investment and technology. Our macroeconomic forecast to 2020 shows India is poised for a very strong period of economic growth and this has significant, positive implications for all forms of gold purchasing in India. With 50 per cent of the Indian population, below 25 years and approximately 150 million weddings anticipated over the next decade, which will drive gold consumption. The objective of the study is to better comprehend the ever-growing demand for gold in India irrespective of the continuous escalation in its price. The study based on the hypotheses that Indian demand for savings and real income levels will drive gold, not by price. The concluding observation is that emerging socioeconomic trends may provide some challenges to the gold market; however, purchasing will remain underpinned by India’s long-standing and deep cultural affinity for gold