Gold volatility and how it has impacted Goa

PANAJI

Gold has witnessed its worst week in the markets since 1983. The war in the Middle East is disrupting global oil flow, damaging energy infrastructure, and fuelling rising fears of prolonged conflict. To add to this, the unprecedented fluctuations in the value of gold have left investors concerned about the current projections.  

The yellow metal has consistently held the title of the ultimate safe-haven asset by providing economic stability and because of its ability to act as a hedge against inflation. For example, during the 2008 global financial crisis, gold remained the most stable commodity among other precious metals; while its price did drop, it avoided catastrophic losses in comparison to other assets. Gold is a high-liquidity asset — it is no one’s liability, carries no credit risk, and is scarce. This has historically preserved its value over time.

The volatility of the current situation can trigger market chaos, forcing large investors to liquidate gold to cover losses or meet financial obligations. This wave of selling can push prices into a downward spiral and strain liquidity.  

At the same time, a contrasting trend, known as the flight-to-quality, often emerges. Investors move out of riskier assets like stocks and shift into safer, high-quality assets such as gold. In such periods, gold remains a preferred refuge for those seeking stability.  

Impact on gold sector  

A senior official from a reputed bank in Panaji shared the latest figures on gold loans, saying, “22K gold, which accounts for almost 90% of gold in the market, is currently valued at Rs 13,485. Interest rates stand at 9.05% for a 12-month repayment scheme and 9.95% for a three-year repayment scheme.”  

He added that gold loans remain a reliable option for short-term liquidity needs. “Gold loans continue to be safe options when required for a top-up of funds to pay off an investment or even as capital when starting a business. It is crucial to note that the loan-to-value percentage varies, from 75% for a three-year scheme to 65% for a 12-month scheme,” he said.  

Gavin DSouza, partner at Meridian Wealth, says the recent dip has unsettled short-term investors who were banking on steady gains. “But this correction reinforces gold’s real purpose — it’s a hedge against inflation and currency weakness, not a one-way bet upwards,” he notes.  

So, what should investors do now? DSouza advises against panic-selling. Instead, he recommends rebalancing portfolios by allocating 10–20% to gold, while diversifying across fixed income, mutual funds, and local real estate to maintain stability.  

Retail buyers choose to wait

Niyati Naik, branch manager at P N Gadgil in St Inez, Panaji, says fluctuations in the gold market do not reflect instantly at the retail level. “The impact of geopolitical tensions or any crises does not affect our store pricing immediately; it often takes between two and three days to see fluctuations in gold prices. Recently, we have seen a major drop, and this is reflected in customer footfall,” she explains.  

But lower prices have not translated into higher sales. “Normally, when prices drop, one would expect an increase in walk-ins, but that is not the case. People tend to wait, expecting prices to fall further, and delay their purchases,” she says. It is obvious here that a paradox exists — customers buy gold as the price increases out of fear of rising prices, but when prices fall, customers play a waiting game, hoping for a further decrease.  

Naik also says that her store has seen a reduction in investors purchasing gold. “Currently, we are seeing that priority purchases are emergency gold or gift gold, while investment buying has reduced,” she notes.  

Her advice to buyers is straightforward: “Keep an eye on the market, as prices are constantly fluctuating, and make the most of offers provided by stores.”  

Festive offers  

To boost demand, jewellers are rolling out special offers and promotions on select products, with more festive deals expected in the run-up to Akshaya Tritiya.  

The pressing question remains — what does the future look like for gold and gold investments? DSouza says that ongoing geopolitical tensions are continuing to disrupt supply chains and push up energy costs, creating conditions that could support a rebound in gold prices, especially if central banks keep adding to their reserves.  

While physical gold will always carry cultural and emotional weight, he notes a clear shift in investor behaviour. “There is a growing move towards Gold ETFs, largely driven by their liquidity and ease of access,” DSouza adds.  

Gold’s status as a safe-haven asset remains firmly in place, particularly in periods of uncertainty. For investors, DSouza notes, the focus now is on staying alert to market movements and making informed decisions to protect and optimise their holdings.