Did you know that the value of household gold with Indians is more than the size of India’s GDP? With gold prices skyrocketing in recent years, the value of gold with Indians has also ballooned. Recent estimates suggest that Indian households hold around 30,000 tonnes cumulatively in gold. At the current valuation of gold, this would mean that the value stands at around $5 trillion. As per International Monetary Fund (IMF’s) World Economic Outlook report in October 2025, India’s nominal GDP for 2025 (financial year ending March 2026) is projected at $4.125 trillion.While household gold is broadly representative of the wealth that has been accumulated over a period of time and is currently held, GDP is the value of goods and services that are produced in an economy over a year.Changes in the price of gold will change the value of gold held, and does not represent economic productivity. However, it is interesting to note that this stock of privately held gold represents one of the largest pools of household financial wealth anywhere in the world.
Rise in Gold Prices
The value of gold with Indian households has seen a big jump due to the rally in gold prices which has beaten all analyst expectations. In 2025 alone, gold prices rose 65%.But why has gold rallied so strongly? According to Praveen Singh, Head of commodities, Mirae Asset ShareKhan, the yellow metal has rallied sharply in this period due to several factors.
Rise in Gold Prices
These include; debasement trade leading to erosion of trust in government bonds and fiat currencies, fiscal concerns in key economies (the US, the UK, Japan), risk to the US Federal Reserve’s independence as the White House pursues its political ambitions to cut rates aggressively even into elevated inflation, dollar weakness, the US weaponizing its currency and the economy, struggling property sector of China, inflation hedge buying, key central banks running fiscal dominant monetary policies, risk to the US dollar’s status of global reserve currency and geopolitical upheaval as nations adopt to changing world order. “What we are seeing is an emergence of a new global monetary system in which gold will play a prominent role in global trade and economic policies. This has led the countries to increase the share of the yellow metal in their forex reserves at the expense of the US dollar,” Praveen Singh tells TOI.Long standing alliances are fracturing, the post-Cold War rules-based order is weakening, and new blocs are emerging as nations prioritize strategic autonomy. Rising security tensions, coupled with the US’s increasingly assertive “America First” posture, have sparked a scramble for resources. This shift is lifting commodity prices broadly, with gold—both a monetary and strategic asset—benefiting disproportionately, he says.Fundamentally, gold’s sharp rise reflects more than cyclical demand. It embodies deep structural changes in global economics, geopolitics, and the functioning of the international monetary system, driving investors and central banks alike toward the world’s oldest store of value, Singh adds.
Importance of Household Gold with Indians
Experts note that while Indians traditionally save in gold, it is still a relatively unproductive class in terms of feeding into economic channels.Ranen Banerjee, who is Partner and Leader, Economic Advisory Services Government Sector Leader at PwC India sees this stock of gold as a non-yielding and non-productive asset which is considered culturally as a financial hedge for rainy days in households. “Some of this gold however has been put to productive use in recent times with the growth of gold loans,” he says.As BlackRock CEO Larry Fink recently told ET: If you want to be a part of the entire growth of India, investing in the Indian equity markets over time is probably the best solution. Gold has proven to be a great international investment, and it is somewhat of a diversifier. But you’re not growing with India.“You’re just growing with basically the fears of the world. Right now, gold has rallied dramatically because of all the fears, the debasement of currencies. So I’m not by any means suggesting gold is a bad investment. But gold has a different parameter over the long run. Gold is independent of India. In fact, when you invest in gold, you actually hurt the Indian economy, because once you invest in gold, there’s no monetary effect to it. It’s an asset that is unaffected to the economy. So when you invest in gold, you’re actually taking money out of the economy,” he told the financial daily.However, Sujan Hajra, Chief Economist & Executive Director, Anand Rathi Group says that the size of India’s household gold when compared to the GDP underscores the scale of wealth embedded in physical assets outside the formal financial system and highlights the macroeconomic significance of even a gradual shift of a portion of this gold into financialised channels such as monetisation schemes, collateralised lending, or gold-linked savings instruments.
Not Just Households, Even RBI Loves Gold
Hedging against global risks and de-coupling from the US dollar, central banks around the world have been aggressively buying gold. The Reserve Bank of India (RBI) has also stepped up gold purchases in the last few years. In fact, India’s gold reserves have risen by 57.81% in the last 10 years. The mix of its foreign exchange reserves has also changed – from 6-7% of gold holdings till a few years ago – the share of gold in India’s forex reserves has risen to over 17%. Madan Sabnavis, Chief Economist at Bank of Baroda sees RBI’s purchase of gold as a case of diversification in forex reserves. This has been done by various other central banks too, he notes.As per World Gold Council data, India currently holds the world’s eighth highest gold reserves. At 880 tonnes, it is just over one-tenth of the gold reserves with America.Sujan Hajra of Anand Rathi Group explains that the gold in RBI reserves is valued at international market prices, which are typically lower than domestic Indian prices because the latter include duties and levies. “The reported value is therefore modestly understated in rupee terms. For India, the gradual rise in gold holdings strengthens the resilience and diversification of the external balance sheet, while the still-dominant foreign-currency assets ensure continued liquidity for exchange-rate management,” he tells TOI.Hajra explains that the RBI, like other central banks, does not accumulate gold in pursuit of financial returns. “Instead, gold serves as a diversification asset offering safety, liquidity, and the absence of counterparty risk. Concerns over currency debasement risks, the concentration of reserves in dollar-denominated assets, and the rising incidence of financial sanctions have led many central banks to increase gold allocations, with global official-sector purchases averaging close to 1,000 tonnes annually in recent years,” he says.Ranen Banerjee of PwC India tells TOI, “The central banks across the world are slowly increasing their reserves of gold as a diversification measure as well as a hedge against an uncertain geopolitical environment. The volatility of various currencies as well as a diversification of trade basket requires a diversification of reserves too.”Gold is a safe haven asset – for households and central banks alike – and as data suggests, both in terms of rise in reserves and their value – it is increasingly gaining importance. As RBI governor Sanjay Malhotra recently noted – gold is the new barometer of global uncertainty, just the way oil prices were once seen as a reflection of geopolitical tensions.
