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Here’s why:
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Gold is a safe-haven asset: In times of geopolitical tension, investors usually rush to gold because it’s considered a stable store of value when other assets (stocks, currencies) feel risky.
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India is a major gold consumer: India is one of the biggest markets for physical gold (especially jewelry and investment demand). If war impacts India's economy or currency (like the rupee weakening), it could drive more domestic buying — or temporarily slow it — depending on how bad the situation gets. Either way, global investors might still push gold prices up.
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Regional instability worries: A war between two nuclear-armed neighbors isn't just a regional concern — it would worry the whole world. That tends to boost global demand for gold.
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Currency volatility: War can cause the Indian rupee and Pakistani rupee to fall sharply. When local currencies fall, gold (priced in USD) gets more expensive locally, and investors may turn even more to gold to protect their wealth.
Here’s a real historical example:
👉 During the Kargil War (1999) between India and Pakistan, gold prices rose internationally.
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The Kargil conflict created fear of a wider war — possibly even a nuclear one.
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Investors moved money into safe assets like gold.
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In mid-1999, gold prices globally began to climb, helped by not only the Kargil War but also other global tensions (like NATO's action in Kosovo and financial instability in emerging markets).
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