SEATTLE (Scrap Monster): The World Gold Council (WGC) published Investment Update Report for Indian gold market.
According to WGC, major central banks across the globe have responded to rising inflation. The Western countries, including the U.S., UK and Canada have hiked interest rates, The US Fed Reserve and the European Central Bank (ECB) have announced withdrawal of emergency economic support package declared during the times of the Covid-19 pandemic. Such an action by the Indian central bank could lead to large market swings and potentially result is an economic slowdown in the country.
In such a scenario, gold offers investors a source of return and effective diversification. It must be noted that gold has generated attractive returns, relative to stocks and bonds, in historical periods of higher rates and high inflation.
The WGC analysis indicates that gold has historically rallied in periods of high inflation in India. It expects investors to be increasingly driven towards gold at times of higher inflation and rising bond yields. The allocation to gold will deliver significant benefits to the average institutional investors in the country.
Incidentally, the country’s headline inflation has been witnessing a rising trend since October last year. The retail and WPI inflation touched fresh peaks of 7.01% and 15.18% in June 2022, it noted.
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