Gold Offers a Layer of Resilience During Rupee Depreciation: WGC
Rupee depreciation and global risks boost gold’s role for Indian investors
Chennai: Apart from providing a buffer during geopolitical uncertainties, gold offers a layer of resilience by amplifying returns for Indian investors during periods of rupee depreciation also, finds the World Gold Council.
An environment characterised by elevated geopolitical tensions, shifting market correlations, and persistent currency risks underscores the importance of building resilient portfolios. Gold’s performance across market cycles, its importance as a diversifying tool and its ability to provide protection during periods of financial stress reinforce its strategic, long-term relevance within portfolios.
“For Indian investors in particular, gold offers an additional layer of resilience by amplifying returns during periods of rupee depreciation,” finds WGC.
As gold is priced internationally in US dollars, the value of the Indian rupee can significantly influence its domestic price. Periods of rupee depreciation tend to amplify gold price rises. Over longer horizons, the depreciation of the rupee has therefore contributed meaningfully to gold’s return profile. This becomes increasingly relevant during periods of stress, when capital flows and exchange rates tend to be volatile.
During such times, gold provides additional protection against uncertainty as well as from currency risk within portfolios.
Despite India’s growth momentum, risks to the outlook stem largely from external uncertainties like spillover from geopolitical tensions, volatility in the global financial markets, and uncertain global economic prospects, have intensified since the beginning of 2026. The implications of the ongoing West Asian conflict are particularly significant for India, from energy supplies to trade and capital flows.
Prolonged disruption could exert pressure on inflation, the rupee, and sectoral performance. Gold has emerged as one of the strongest performing assets in recent years, outperforming equities, bonds and currencies as investors have sought protection against geopolitical tensions, policy uncertainty and inflation risks. Price momentum has further reinforced investor demand. Importantly, many of the drivers behind this rally remain firmly in place in 2026.
In this environment, building strong buffers and constructing resilient portfolios becomes increasingly important for wealth preservation. The case for gold in Indian portfolios extends beyond recent performance. Market cycles, correlation dynamics, currency movements, and periods of systemic stress all reinforce gold’s role as a portfolio stabiliser.
