Sovereign Gold Bonds Witnessed Record Inflows in FY22

Traditionally, gold is considered as a hedge against volatility in the stock market.

SEATTLE (Scrap Monster): The demand for gold as a medium of investment has surged significantly over the past couple of years. This is clearly evident from the recently released data which suggests increased investments in sovereign gold bonds (SGBs) and gold exchange traded funds (ETFs).

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As per data, the investments in gold bonds surged to hit INR 16,048 crore in FY21. It declined marginally to total INR 12,991 crore in FY22. Also, gold ETF inflows totalled INR 6,918 crore in FY21, this being the highest recorded inflows in a single financial year since the launch of the product in FY08. However, the inflows dipped sharply to INR 2,540 crore in FY22.

Traditionally, gold is considered as a hedge against volatility in the stock market. However, the relatively stable stock markets made many investors park their money in equity and equity-related assets. The dip in prices of gold also made investors shy away from it. However, with the advent of Covid-19 pandemic, the stock markets turned volatile again. The pandemic-related uncertainties and geopolitical tensions pushed up gold prices, thus making it a preferred investment choice once again.

Meantime, portfolio managers recommend investors to have allocation to gold, though gradually.

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