India's Unstoppable Love for Gold: Soaring Prices Fill Household Coffers

Indian Households Hold About 34,600 Tons of Gold,
More Than Four Times the US Central Bank's Reserves
Gold in India Is Deeply Tied to Culture and Society,
Serving as a Means of Wealth Transfer

As gold prices have recently reached record highs, it has been analyzed that the value of gold assets held by Indian households amounts to approximately 3.8 trillion dollars (about 5,520 trillion won). Experts say that gold, accumulated over generations, is surging in value and is having a broad impact on the Indian economy as a whole.

On October 10 (local time), Bloomberg News cited a Morgan Stanley report stating that Indian households hold about 34,600 tons of gold. This is three times the amount privately held in China (12,349 tons).

Even compared to the gold reserves held by central banks around the world, Indian households possess more than four times the gold held by major countries such as the United States (8,133 tons) or Germany (3,350 tons). Compared to the Reserve Bank of India's holdings (880 tons), the figure is 39 times higher.

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Morgan Stanley estimated that, thanks to the recent surge in gold prices, the value of gold assets held by Indian households has reached about 3.8 trillion dollars. The report’s authors, economists Upasana Chachra and Vani Gambhir, analyzed, "The massive gold holdings of Indian households are generating positive wealth effects by improving household balance sheets amid rising gold prices."

In India, gold is not merely an investment vehicle but an asset deeply rooted in culture, religion, and society as a whole. Households use gold as a long-term savings tool and a financial safety net in emergencies, and it is commonly exchanged as gifts during weddings and festivals. As a result, gold functions as a means of intergenerational wealth transfer.

Last year, India purchased the most gold jewelry in the world (560 tons), and also bought 240 tons of gold bars. The Indian wedding culture, with about 10 million weddings annually, is a key driver of gold demand. Demand related to weddings alone is estimated at 300 to 400 tons per year. However, as of 2022, India’s gold production was only 1 ton. Due to strict mining regulations, the country relies on imports for most of its gold-over 700 tons.

Gold also stands out in the asset composition of Indian households. While stocks make up less than 6% of total assets, gold accounts for about 15%. The market for loans secured by gold is also rapidly growing. As of December last year, the number of gold-backed loans in India had increased by 68% compared to April, which is more than five times the growth rate over the same period the previous year (12.7%). At Muthoot Finance, India’s largest gold-backed loan company, loan approvals are completed in an average of 15 minutes.

Morgan Stanley analyzed that the wealth effect from rising gold prices, combined with the central bank’s interest rate cut cycle and the government’s easing of consumption taxes, is contributing to increased consumption capacity within India.