To put that in perspective, Pakistan’s entire economy is worth around $411 billion, according to IMF estimates for FY25. This means India’s private gold holdings are nearly six times larger than Pakistan’s GDP. In fact, the value of gold held by Indian households is greater than the GDP of developed countries like Italy ($2.4 trillion) and Canada ($2.33 trillion).
According to UBS, gold prices have doubled since FY20, significantly boosting Indian household wealth. The bank forecasts prices to rise further to $3,500 per ounce by 2026, driven by global uncertainties such as trade tensions, inflation, and geopolitical risks. While UBS expects gold volume demand in India to soften in FY26, high prices will keep net imports elevated at $55–60 billion, or about 1.2% of GDP.
Despite record prices, gold demand in India held up well in FY25, with consumer demand at 782 tonnes—15% above the pre-pandemic average. Jewellery demand softened slightly, but retail investment in gold bars and coins jumped 25% YoY, supported by a cut in customs duty from 15% to 6% in mid-2024.
Looking ahead, UBS projects gold demand to moderate to 725 tonnes in FY26, before recovering to 800 tonnes in FY27 as household consumption stabilises. A key factor behind this recovery could be a $55 billion pay boost expected from the 8th Central Pay Commission, which tends to increase physical savings—particularly in real estate and gold.
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While India’s gold reserves are impressive, efforts to monetise this wealth have largely fallen short. UBS notes that less than 2% of household gold is used as collateral for loans, despite attempts by banks and NBFCs to expand in this segment. Bajaj Finance, Shriram Finance, and Chola are among the financial firms increasing their exposure to gold-backed lending. However, structural barriers—such as emotional attachment to gold jewellery—have limited the success of initiatives like the Gold Monetization Scheme (GMS) and Sovereign Gold Bonds (SGBs). UBS also points out that SGBs were discontinued in February 2024, partly due to rising gold prices and growing liabilities for the government.That said, India’s current account deficit remains manageable, despite the heavy import burden of gold. UBS attributes this to buffers built post-pandemic, including a strong services trade surplus and robust remittance flows, which help offset gold-related outflows.Also Read: IT stocks up 35% in less than 2 months. Can it withstand Fed caution and geopolitical risk?
With 14% of the world’s private gold stock, India continues to be the largest private holder of gold globally. As UBS puts it, Indian households are not just sentimentally attached to gold—they’re growing wealthier because of it. And in a world of uncertainty, India’s age-old trust in gold seems to be paying off.
