Amid price surge, should you buy new or exchange old gold?, Pg23.

Key Highlights:

• India is the second-largest consumer of gold globally, with 803 tonnes purchased in 2024, only behind China's 857 tonnes.
• Indian households held 34,600 tonnes of gold as of June this year, valued at approximately $3.8 trillion, which is 89% of India's GDP.
• Gold prices have surged, crossing Rs 1 lakh per 10 grams in April and moving towards Rs 1.3 lakh, a 50% increase from last year.

Detailed Insights:

• High gold imports contribute to a wider merchandise trade deficit, weakening the Indian rupee and increasing the cost of foreign goods and services.
• A decade ago, RBI Governor Raghuram Rajan cautioned against excessive gold buying, but now household investments are shifting towards mutual funds and equities.
• The share of household investment in mutual funds and equity doubled to 15.2% of gross financial savings in 2024-25, driven by a shift to the stock market.
• Despite an overall decrease in gold imports by 9% in the first half of 2025-26, September saw a surge to $9.62 billion, doubling the imports from the previous year due to the upcoming Diwali festival.

Key Concepts Involved:

• Merchandise Trade Deficit: The difference between a country's imports and exports of goods.
• Indian Rupee: The official currency of the Republic of India.
• Gross Domestic Product (GDP): The total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period.