Rising Gold Prices Could Add Up to 100 BPS to India's GDP
Gold prices have been rising again, and according to Jefferies, this upward trend could add up to 100 basis points to India's GDP. The Wall Street brokerage notes that Indian households are holding more than 25,000 tonnes of gold, whose value has more than doubled to $3.9 trillion by March 2026 from $1.9 trillion in March 2024.
Jefferies estimates that the surge in gold prices over the past year has created a hidden boost to the country's economy, which hasn't yet fully shown up. The share of gold in total household wealth has grown rapidly, rising to 24.2% by March 2026 from 15.4% in March 2023.
The gold loan market has also seen significant growth, with organised gold loans standing at $197 billion as of March 2026, up 73% in dollar terms over the past two years. Gold loans now account for about 7% of total bank and NBFC credit, and Jefferies expects this gap to narrow over the next two years.
The brokerage estimates that a 'reversion' could add 8-10 percentage points to the monetisation ratio, adding roughly $15-20 billion a year in gold loans. On top of that, it estimates a further 10% rise in gold prices could generate about $400 billion in additional household wealth and another $20-25 billion in gold loans.