Is Gold Losing its Shine? Institutional Investors Still Unconvinced

Is Gold Losing its Safe Haven Appeal?

Despite a surge in interest in gold as a safe haven asset, institutional investors are still holding back from investing in the yellow metal, according to a new report by Liechtenstein-based investment firm Incrementum.

While gold prices experienced a sharp rally from January to April 2025, driven by global uncertainties like trade tensions, they recently fell back. This drop suggests that investors may be feeling less worried about these risks, diminishing gold’s safe haven appeal.

Family Offices Remain Conservative

Family offices, which manage the wealth of ultra-high-net-worth individuals, only allocate about 1% of their portfolios to gold and precious metals. This is significantly less than other asset classes like private equity, real estate, and cash, highlighting a distinct lack of enthusiasm from institutional investors.

Gold Demand Trends Shifting Landscape

Data from the World Gold Council reveals that investment-related gold demand surged by a whopping 170% year-on-year in the first quarter of 2025. This boom was fueled by investor anxieties surrounding Donald Trump’s trade policies and the escalating trade war with China. However, the subsequent 90-day pause on tariffs has cooled down demand, leading to a decline in gold prices.

Gold Prices in India

In India, the price of gold has fluctuated recently. On May 25, MCX gold prices stood at ₹96,400/10 gm, while 24-carat gold fetched ₹96,860/10 gm and 22-carat gold was priced at ₹88,788/10 gms, according to the Indian Bullion Association (IBA).

Despite the initial surge, gold imports have decreased sequentially, indicating a potential slowdown in jewellery demand due to high prices.