Gold Prices, Tight Credit Fuel India's Gold Financing Boom

India's gold-financing sector is poised for strong growth due to elevated gold prices and tighter access to unsecured credit. The market, valued at Rs 18.6 trillion, remains 'underpenetrated' with only 9-10% of household gold formally monetized.

The report by Antique Stock Broking notes that India accounts for around 26% of global gold demand, with jewellery being the dominant form of consumption. Retail investment demand for bars and coins has also been rising, reflecting the yellow metal's appeal as a store of value, inflation hedge, and safe-haven asset.

Elevated gold prices and tighter access to unsecured credit are driving growth in gold financing, with AUM of NBFCs specializing in gold financing expected to grow at a 40% CAGR over FY25-27E to reach Rs 4 trillion by FY27E. This acceleration is driven by elevated gold prices, a shift towards secured credit, and an evolving regulatory environment.