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Gold is well positioned to anchor Indian portfolios during periods of market stress, the World Gold Council said in a report, as geensions, currency volatility and shifting asset correlations reshape investment strategies.
"Escalating geopolitical tensions, changing relationships opolitical tacross asset classes, and currency volatility are likely to keep financial conditions uncertain, reinforcing the importance of resilient portfolios. Gold is well positioned to anchor Indian portfolios during periods of market stress," the World Gold Council report titled 'Why gold in 2026? An anchor for Indian portfolios. The report argued that despite India's strong macroeconomic performance, posting growth above 7 per cent for three consecutive years, financial markets have delivered muted returns. A weakening rupee, subdued capital inflows and elevated equity valuations have limited gains, while lower interest rates have compressed bond yields. In this environment, gold has emerged as a standout performer relative to equities, bonds and cash. Heightened global uncertainty is a key driver. The Council pointed to risks stemming from geopolitical conflicts, particularly in West Asia, which could disrupt energy supplies, trade flows and inflation dynamics for India. Such conditions typically push investors toward safer assets, reinforcing gold's appeal as a hedge, it asserted. Data in the report showed that gold has historically outperformed during periods of systemic stress, helping reduce portfolio losses. Currency dynamics also support gold's case. Since gold is priced in US dollars, a depreciating rupee tends to amplify domestic gold returns, offering an additional layer of protection for Indian investors during volatile periods, it noted. The Council also noted that gold should be treated as a strategic allocation rather than a tactical bet. "Our portfolio analysis further highlights gold's positive contribution. Over a 19-year period, an average INR portfolio would have delivered higher risk-adjusted returns and lower drawdowns with gold allocations in the range of 7.5 per cent to 15 per cent, underscoring its value as a core portfolio component," the report read. (ANI)
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