India’s Gold Rush: Household wealth hits $3.8 trillion as prices soar to record highs

Indian households are estimated to hold around 34,600 tonnes of gold, valued at about $3.8 trillion which is roughly 88.8 per cent of the country’s GDP. With gold prices touching new highs, this massive holding is giving a positive boost to household wealth and balance sheets across the country, ANI citing Morgan Stanley report. 

Gold is running at its life time high value of Rs 1,23,677 per 10 grams, trading around Rs 1,21,350 with a 0.43 per cent high, as per the data of MCX. Whereas, “In International market it is trading around $4,056 per ounce, with domestic with domestic prices also reaching record levels of around Rs 127,300 per 10 grams. Year to date, gold prices have risen by 54.6 per cent in US dollar terms and 61.8 per cent in INR terms,” ANI citing the data of Morgan Stanley report. 

A preference for financial assets by households has meant that investing in gold through ETFs has picked up recently, with ETF flows tracking at US$1.8bn in the last 12 months. This trend is expected to continue, the report further states.

India remains the world’s second-largest consumer of gold, accounting for about 26 per cent of global demand, just behind China at 28 per cent.

Usually, most of the gold demand in India comes from households. But recently, central banks have also started buying more gold at the margin. The Reserve Bank of India (RBI) has added approximately 75 tonnes of gold to its reserves since 2024. With this, its total holdings have reached to 880 tonnes, making up nearly 14 per cent of India’s total foreign exchange reserves, ANI reported. 

Gold purchase has risen to $68 billion on a 4q trailing basis as of June 25, in volume terms it remains steady at around 767 tonnes, far below the peak of 1145 tonnes in QE June-11, ANI citing WGC data. 
Since India adopted the flexible inflation framework in 2016, inflation has remained relatively moderate, averaging around 5 per cent year-on-year. At the same time, interest rates stayed positive, averaging about 1.7 per cent since the post-pandemic policy normalization. These stable macroeconomic conditions have played a key role in keeping gold imports under control, limiting them to roughly 1 per cent to 1.5 per cent of India’s GDP. 

This is significantly lower than the all-time high of 3.3 per cent of GDP recorded in May 2013. Sound macroeconomic stability has helped ensure that households do not develop an excessive preference for saving in physical assets, thereby containing gold imports and easing pressure on the current account deficit, the report added.