Rising Gold Prices May Add Up to 100 BPS to India's GDP

Rising gold prices in India could have a significant impact on the country's GDP and consumer spending, according to Jefferies. The brokerage estimates that the growing gold market has added $15-20 billion a year in gold loans to household wealth, which in turn could add another 80-100 basis points of tailwind to GDP and consumer spending.

The rise in gold prices has also led to an increase in gold imports, with the country's gold import bill rising from $36 billion in FY23 to $79 billion in FY26. This has weighed heavily on the current account deficit.

Jefferies estimates that only around 15% of household gold is currently used as collateral for formal or informal lending channels, assuming a loan-to-value ratio of about 65%. The brokerage expects this gap to narrow over the next two years, potentially adding another $400 billion in additional household wealth and another $20-25 billion in gold loans.

The RBI's own gold reserves have also grown significantly, rising from $52 billion in March 2024 to $111 billion in August 2026. This represents a significant increase in the share of gold held in foreign exchange reserves, which has risen from about 8% to about 16% over roughly the same window.