The trilogy of the pandemic, monetary expansion, the geo-political developments in the last 2-3 years have had many repercussions in the global macro environment. That has bought the attention of investors towards gold for diverse reasons.
·        A big development that has been underway is that of central banks being net buyers of gold, in a trend reversal, since last few years. China has been on a buying spree for ten consecutive months. Central banks overall added over 1100 tons of gold, more than double the annual average of many decades.
·        Emerging market central banks in particular have been raising the proportion of gold as a reserve asset. Though it stands currently much lower as compared to developed markets, is de-dollarisation a motivation?
·        A relatively new category of funds viz ‘Multi-asset’ grew quickly in the last year in India with gold as a third asset class, as equities and bonds both underperformed.
·        Hindsight is as important, and we delve into the performance of gold in diverse economic environments.