With Union Budget 2026 just 10 days away, the precious metals industry is advocating for transformative reforms as gold and silver prices reach unprecedented levels. Industry leaders view the upcoming budget as a crucial opportunity to modernize how Indians invest in gold, particularly through digital platforms and formal financial instruments.

Record Gold Prices Drive Investment Shift

Gold prices have surged to lifetime highs this week, with rates approaching ₹1.50 lakh per tola. This dramatic price appreciation has created both opportunities and challenges for the market.

The price rally has rewarded long-term investors but highlighted a structural challenge: a substantial portion of household gold remains in physical form, offering limited contribution to the broader economy.

Digital Gold Awareness Campaign Needed

Mahendra Luniya, Chairman of Vighnharata Gold Ltd, emphasizes the urgent need for government intervention to promote digital gold adoption. "If we look at the goal of Viksit Bharat 2047 from a logical and economic standpoint, it becomes clear that India must unlock the vast amount of gold lying idle in households and integrate it into the digital economy," Luniya stated.

Gold Exchange-Traded Funds (ETFs) allow investors to gain gold price exposure without physical ownership. These instruments track domestic gold bullion prices and trade on stock exchanges like shares, with each unit typically representing one gram of high-purity gold held by the fund. Similar mechanisms exist for silver ETFs.

Economic Impact of Household Gold Integration

The industry argues that converting physical gold stored in homes into digital assets could significantly accelerate economic growth. According to industry estimates, shifting even a small portion of household gold savings into digital instruments could provide substantial capital availability and enhanced economic activity.

"This effectively locks a massive amount of liquidity inside private vaults instead of allowing it to circulate within the Indian economy. Digital gold offers a practical solution to unlock this value," Luniya explained.

Sovereign Gold Bond Revival Sought

A key expectation from Budget 2026 is the revival of the discontinued Sovereign Gold Bond (SGB) scheme. Industry leaders consider SGBs among the most effective policy measures in the gold sector.

"The impact of Sovereign Gold Bonds was clearly visible; public awareness increased, and behavioural change began to take place. Unlike many schemes that incur fiscal losses, SGBs allowed the government to access capital without financial strain while productively utilising household gold savings," Luniya noted.

Transformation Challenges and Opportunities

The transition from physical to digital gold faces inherent challenges, as many consumers still prefer purchasing gold as jewellery or coins. However, industry leaders believe that major budget announcements focused on awareness campaigns could demonstrate how India can effectively invest and monetize its most trusted asset.

The industry's expectations center on government initiatives that could integrate household gold savings into the formal financial system, supporting long-term economic objectives while maintaining investor confidence in gold as a reliable investment option.

Gold and silver prices surged to unprecedented levels on January 21, 2026, as investors flocked to safe-haven assets amid escalating geopolitical tensions and trade policy concerns. The precious metals rally reflects growing global uncertainty and risk aversion among market participants.

Global Price Performance

International bullion markets witnessed significant gains across both precious metals. The following table shows the key price movements:

Analysts attributed the rally to persistent risk aversion amid renewed trade threats and geopolitical uncertainty affecting global markets.

Indian Market Response

Domestic bullion prices mirrored the global surge, with both metals reaching significant price levels:

Silver's performance was particularly notable, having crossed the ₹3 lakh mark earlier in the week before advancing further.

Market Drivers and Expert Analysis

Colin Shah, Managing Director of Kama Jewelry, identified renewed uncertainty around US trade policy, including proposed tariffs on several European countries, and broader geopolitical tensions as key drivers pushing investors towards precious metals. He noted that while elevated prices may temper discretionary jewellery demand in price-sensitive segments, gold remains well supported over the medium to long term due to its dual role as a store of value and adornment.

NS Ramaswamy, Head of Commodity & CRM at Ventura, highlighted that gold is trading near lifetime highs across exchanges, supported by mounting geopolitical risks ranging from potential trade retaliation between the US and Europe to unresolved conflicts in Eastern Europe and West Asia. He emphasized that a weakening Indian rupee has amplified domestic returns, as higher global prices and currency depreciation work in tandem.

Silver's Exceptional Performance

Silver's outperformance has drawn particular attention from market participants. Aamir Makda, Commodity & Currency Analyst at Choice Broking, noted that silver has delivered strong returns in 2026, supported by:

• Structural supply deficits
• Rising industrial demand from solar power sector
• Increased usage in electric vehicles
• Growing demand from data centres

While Makda sees scope for further upside, he cautioned that some technical indicators suggest waning momentum, prompting selective profit-taking by traders at elevated levels.

Investment Implications and Tax Considerations

Prashant Thacker, Managing Partner at Thacker & Associates, observed that rising volatility and global uncertainty have increased interest in various gold investment vehicles, including physical bullion, ETFs, gold mutual funds, and Sovereign Gold Bonds (SGBs). He noted that recent tax changes, such as the withdrawal of indexation benefits for certain gold investments, have altered post-tax returns, while SGBs continue to retain appeal due to tax-free maturity.

Shoyal Kumar, Co-Founder and CEO of Tredo, reported that retail investors are adopting a balanced approach at current price levels. Many investors are holding positions for stability, while some, particularly in silver, are booking partial profits after the sharp rally. Kumar noted relatively stronger demand among digital retail investors for silver, which is increasingly viewed as an affordable investment with both industrial and safe-haven appeal, along with a growing preference for staggered, small-ticket purchases to manage volatility and average costs.