RBI Grade BNABARD ESISEBI
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A study published in the monthly bulletin of the Reserve Bank of India (RBI) says gold is the safest asset during geopolitical stress, while crude oil is the most affected.
“RBI MPC Unpacked: Key Theory Meets Today’s Macro Trends”Tap to play · from the C4S channel
The study was written by RBI staff with guidance from Poonam Gupta. RBI clarified that these are the authors’ views, not the official RBI position.
What the study found
- Crude oil
- Most sensitive to geopolitical tensions
- Prices swing sharply due to supply disruptions, wars, and sanctions
- Gold
- Most stable asset
- Acts as a safe haven during uncertainty
- Investors move money to gold in crises, which keeps it stable
- Silver
- Falls between gold and oil
- More volatile than gold because of industrial demand, but less risky than oil
- US Treasury bonds
- Show moderate volatility
- Investors buy them during stress (“flight to safety”), lowering yields but causing some market movement
Why gold stays strong
- Gold is seen as:
- A hedge against inflation
- A store of value
- Central banks, especially in emerging markets like India, are increasing gold in their forex reserves.
India’s forex reserves (latest data)
- Total reserves rose to $688.95 billion
- Gold reserves increased by $758 million to $107.74 billion
- Foreign currency assets (FCAs) rose to $557.79 billion
ETF (Exchange Traded Fund)
An ETF is an investment product that tracks something and is bought and sold like a share on the stock market.
What does an ETF track?
An ETF can track:
- A stock index (like Nifty 50 or Sensex)
- Gold (Gold ETF)
- Bonds
- A sector (banking, IT, pharma)
- Even foreign markets
