Institutional Investors Show Low Interest in Gold Despite Market Volatility
Despite a surge in interest around gold as a strategic hedge against market volatility and inflation, institutional investors remain hesitant to significantly increase their exposure, according to a report by Liechtenstein-based investment and asset management firm Incrementum.
GoldInstitutional InvestorsMarket VolatilityInflationPrecious MetalsReal EstateMay 25, 2025
According to an analysis of the global markets, family offices allocate just one per cent of their portfolios to gold and precious metals, putting it on equal footing with niche assets like art, antiques, and infrastructure, and far behind more favoured categories such as private equity, real estate, and even cash.
"Despite growing interest in gold as a strategic asset, institutional allocations remain strikingly low. Family offices allocate just one per cent of their portfolios to gold and precious metals, placing it on par with art and antiques, as well as infrastructure, and well below allocations to private equity, real estate, or even cash," the report by Incrementum said.
In recent months, gold has seen interest due to the instability arising out of trade tensions; however, the gold price has been witnessing a fall after a sharp rise witnessed over January-April 2025, in which gold prices had rallied by 25 per cent. The fall in prices reflects reduced anxiety about the trade war and subsequently reduced safe-haven appeal.
Data released from the World Gold Council, although it is lagged, also shows the main sources of demand for gold that have been in place in the first quarter of 2025. In this regard, investment-related demand for gold that increased by 170 per cent YoY in Q1 2025 underpinned the rally in the period as investors turned to the yellow metal in the face of uncertainty about the Trump policy regime and, in particular, about the trade war. As the trade-war anxiety has eased post the 90-day truce between the US and China, the subsequent demand for gold has reduced, which has driven prices lower.
In Indian markets, the price of gold on Saturday reached 98,900.00 for 10 grams. Prices on May 17, as per the prices at MCX, were at ₹92,480 for 10 grams. Gold prices in Indian markets have traded flat, responding to weakness in global prices and a mild appreciation of the INR against the USD that has taken place over the period.
In volume terms, gold imports have fallen on a sequential basis as the country imported USD 3.1 bn worth of gold in April after importing USD 4.5 bn worth of gold in March, reflecting an easing in jewellery demand that has taken place in response to elevated prices.
Frequently Asked Questions
What is the current allocation of gold in family office portfolios?
Family offices allocate just one per cent of their portfolios to gold and precious metals, placing it on par with art and antiques, as well as infrastructure, and well below allocations to private equity, real estate, or even cash.
Why has the interest in gold increased recently?
The interest in gold has increased due to market instability and trade tensions, as gold is seen as a strategic hedge against market volatility and inflation.
What has happened to gold prices in recent months?
Gold prices have seen a fall after a sharp rise of 25 per cent over January-April 2025. The fall in prices reflects reduced anxiety about the trade war and subsequently reduced safe-haven appeal.
What is the main source of demand for gold in the first quarter of 2025?
Investment-related demand for gold increased by 170 per cent YoY in Q1 2025, driven by uncertainty about the Trump policy regime and the trade war.
How have gold prices and imports been affected in Indian markets?
Gold prices in Indian markets have traded flat, responding to weakness in global prices and a mild appreciation of the INR against the USD. Gold imports have also fallen on a sequential basis, reflecting an easing in jewellery demand due to elevated prices.
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