Gold price increases, India interrupts gold deposit program for interest

This "gold monetization" program was introduced in 2015, including gold deposits with a term of 1-3 years, 5-7 years and 12-15 years.

Gold deposits for 5-7 and 12-15 years have been suspended, the country's Finance Ministry said on Tuesday evening, citing the changing market situation and the effectiveness of the program.

Banks can still provide short-term gold deposits depending on their commercial feasibility, the Indian Finance Ministry added.

This move is expected to help reduce government financial obligations in the future and reduce risks related to gold prices. While banks pay interest on short-term gold deposits, the government will pay interest on medium and long-term gold deposits.

Gold prices, seen as a hedge against risks amid political and economic uncertainty, have risen more than 15% this year, driven by rising political tensions and uncertainty over US tax policy.

Current gold deposits will continue until maturity, the Indian Finance Ministry said.

The Reserve Bank of India (RBI) has revised the main guidelines for this program to adjust the changes.