Economic Survey 2026: Gold has once again taken centre stage in India’s economic landscape, not just as a traditional store of value but as a strategic stabiliser in an increasingly uncertain global environment.
According to the Economic Survey, the recent surge in gold prices was not merely a cyclical phenomenon, but a response to deeper changes in global risk perception, real interest rates and confidence in financial assets.
It highlighted that global financial markets are already responding to heightened fragility. During 2025, gold prices surged sharply, rising from $2,607 per ounce to $4,315 per ounce, driven by a weaker US dollar, expectations of persistently low real interest rates and growing geopolitical risks. This momentum continued into early 2026, with gold touching $5,101.34 per ounce as of January 26, underscoring strong and sustained safe-haven demand.
“Financial markets are already pricing in fragility arising from geopolitical uncertainties, trade fragmentation and rising concerns over financial market stability,” stated the Survey adding that gold prices have emerged as a clear reflection of these underlying stresses.
How gold is influencing inflation and reserves
According to the Economic Survey, the surge in gold prices has had a visible impact on India’s inflation dynamics. While headline inflation moderated sharply during FY26, core inflation appeared relatively sticky. It clarified that this persistence was largely driven by elevated precious metal prices rather than broad-based price pressures.
Average core inflation increased from 3.5% in FY25 to around 4.3% in FY26, even as food inflation softened considerably. However, when gold and silver prices were excluded, inflation trends looked far more benign. Between June and December 2025, core inflation excluding precious metals eased from 3.4% to 2.3%, pointing to limited demand-side overheating.
Explaining this divergence, the Survey stated, “the apparent stickiness in core inflation is primarily attributable to the sharp increase in precious metal prices, while underlying inflation pressures remain well contained.” This distinction, the Survey said, is critical to understanding why inflation remained elevated despite easing conditions across most other categories.
Gold strengthens India’s external buffers
Beyond inflation, gold played an increasingly important role in strengthening India’s external sector resilience. The yellow metal’s importance has also increased significantly in India’s external sector. The Economic Survey reported a sharp rise in the value of gold held as part of India’s foreign exchange reserves during FY26.
The Economic Survey reported a sharp rise in the gold component of India’s foreign exchange reserves during FY26. While foreign currency assets softened marginally, the value of gold reserves rose sharply from $78.2 billion at the end of March 2025 to $117.5 billion as of January 16, 2026.
This increase reflected both valuation gains due to elevated global gold prices and a continued preference among central banks to diversify into non-dollar reserve assets. The Survey further noted that this trend aligned with a broader global pattern, where several emerging market economies had increased gold holdings amid geopolitical uncertainty and shifts in the global interest rate cycle.
Highlighting this shift, the Survey noted, “the growing share of gold in foreign exchange reserves reflects a broader international trend of central banks diversifying reserve assets amid rising geopolitical and financial uncertainty.”
Gold as a hedge in a fragile global order
The Economic Survey placed gold’s resurgence within the context of a global order that is becoming more fragmented and risk-prone. It pointed out that global trade and financial systems are increasingly shaped by geopolitical considerations rather than purely economic efficiency, reducing the margin of safety in markets.
It cautioned that even small shocks can now have disproportionate effects, stating that “the narrowing margin of safety in global financial markets implies that modest disruptions can trigger outsized spillovers across economies.” In such an environment, gold has regained relevance as a hedge against systemic risks.
Gold’s role today extends well beyond tradition or sentiment, it said, further noting that by influencing inflation dynamics, strengthening external buffers and signalling global risk perception, gold has become a strategic anchor for economic stability.
Summing up its assessment, the Economic Survey concluded that “gold’s resurgence underscores its enduring role as a store of value and a stabilising asset in an increasingly uncertain and fragmented global economic landscape.”
Gold, Silver Rates Today
Gold prices surged sharply on the MCX during early trade on Thursday, January 29, as a weaker US dollar, sustained retail demand and rising geopolitical tensions between US and Iran lifted sentiment across precious metals.
The rally came a day after the US Federal Reserve left policy rates unchanged on January 28, even as markets continued to factor in the possibility of two rate cuts later this year. The pause reinforced expectations of an easier monetary stance ahead, supporting demand for non-yielding assets such as gold and silver.
On the domestic exchange, MCX gold February futures jumped over ₹14,850, or nearly 9 %, to scale a fresh all-time high of ₹1,80,779 per 10 grams. Silver prices also extended gains, with MCX silver March futures rising more than ₹23,100, or around 6 %, to hit a record high of ₹4,08,487 per kg.
Global cues remained supportive, with international gold prices touching record levels and moving closer to $5,600 per troy ounce, while silver advanced towards the $120 mark. The sharp rise in overseas prices was driven by heightened geopolitical uncertainty and continued weakness in the dollar against major currencies.
