India's Gold Market Sees Shift Towards Monetization and Borrowing

India's relationship with gold is undergoing a significant transformation due to rising prices and changing investment habits. According to World Gold Council data, India's demand for gold dropped 6% year over year to 131 tonnes in Q2 2026, while spending increased 35% to ₹1.979 trillion.

This shift from gold ownership to gold monetization has led to the expansion of gold loans as a major credit segment. CredBuddha, a financial comparison platform, notes that gold-backed borrowing has emerged as the second-largest retail lending segment after housing in Q2 2026, according to the World Gold Council's analysis.

A gold loan provides an alternative to keeping gold at home or selling it, allowing borrowers to access funds based on their collateral value. However, this also involves interest costs, repayment obligations, and default risks. Borrowers should carefully review loan terms, including LTV limits, interest rates, and processing fees before making a decision.