Gold Price Surge Boosts Indian Household Wealth by ₹3 Lakh Crore, Says Report
According to a Systematix Research report, the recent surge in gold prices has significantly boosted the paper wealth of Indian households by an estimated ₹3 lakh crore. However, this rise in wealth has not translated into higher consumption growth across the economy.
The report highlights that in India, the real driver of consumption is income growth, which has remained sluggish in recent years — particularly during the post-COVID K-shaped recovery. As a result, despite soaring gold prices, overall consumer spending has not seen any substantial improvement.
Rising Gold Prices Create a “Wealth Effect” — But Not Real Spending
The report explains that higher gold prices primarily create a notional or “wealth effect”. This means that while families appear wealthier on paper, they typically do not increase their spending unless they liquidate their gold assets. Since most families sell gold only during financial stress, this wealth increase does not effectively drive consumption growth.
Additionally, factors such as declining household savings, reduced personal credit, and persistent pressure on incomes are limiting India’s consumption momentum. The report also suggests that higher gold prices have led to an increase in gold-backed loans as families leverage their holdings to meet financial needs.
Gold as Collateral and Loan Growth
The sharp rise in gold prices has strengthened the collateral value of gold holdings, making them an attractive asset for retail loans. However, Systematix Research notes that the rise in gold-backed lending is more indicative of financial stress rather than higher consumption or consumer confidence.
How Much Gold Do Indian Households Own?
According to data from the World Gold Council, Indian households collectively own about 24,000–25,000 tonnes of gold — roughly 11% of the world’s total gold reserves. With gold prices soaring since 2024, the total value of these holdings has reached approximately ₹3.24 trillion (₹3.24 lakh crore).
This value is nearly equivalent to India’s GDP, signaling an almost 100% increase in household net worth on paper — though without a corresponding rise in consumption.