Indians own $3.8 trillion worth gold! Wealth effect on household balance sheet
With gold prices at record highs of $4,056 an ounce globally and around Rs 1,27,300 per 10 grams domestically, prices have surged 54.6 per cent in dollar and 61.8 per cent in rupee terms so far this year.
- Oct 10, 2025,
- Updated Oct 10, 2025 3:59 PM IST
Indian households hold an estimated $3.8 trillion worth of gold, equivalent to about 88.8 per cent of the country’s GDP, according to Morgan Stanley. The brokerage said this vast store of wealth is providing a positive wealth effect to households, even as macroeconomic stability keeps the flow of new gold demand largely range bound.
With gold prices at record highs of $4,056 an ounce globally and around Rs 1,27,300 per 10 grams domestically, prices have surged 54.6 per cent in dollar and 61.8 per cent in rupee terms so far this year. Morgan Stanley noted that India remains the world’s second-largest consumer of gold, accounting for roughly 26 per cent of global demand, behind China’s 28 per cent. While household consumption continues to dominate, central bank purchases have also risen at the margin — the Reserve Bank of India (RBI) has added about 75 tonnes of gold since 2024, taking its total holdings to 880 tonnes, or around 14 per cent of India’s total foreign exchange reserves.
As per World Gold Council (WGC) data cited by the brokerage, gold consumption in value terms has climbed to $68 billion on a four-quarter trailing basis as of June 2025. In volume terms, however, consumption remains stable at around 767 tonnes, far below the 2011 peak of 1,145 tonnes.
Morgan Stanley highlighted that a benign inflation trend—averaging 5 per cent year-on-year since the adoption of the flexible inflation targeting framework in 2016—and positive real interest rates (averaging 1.7 per cent since post-pandemic policy normalisation) have kept gold imports contained at 1–1.5 per cent of GDP, significantly lower than the 3.3 per cent of GDP seen in May 2013. This macro stability has helped prevent an excessive tilt toward physical assets, easing pressure on the current account deficit.
The report said gold acts as a critical buffer in the household balance sheet. By Morgan Stanley’s estimates, households own around 34,600 tonnes of gold, or $3.8 trillion in value, providing a significant cushion to household wealth amid rising prices. It added that household preference for financial assets remains intact, with gold ETF inflows amounting to $1.8 billion over the past 12 months.
According to Morgan Stanley, stable inflation and positive real rates have kept gold demand contained while encouraging a shift toward financial savings. However, the existing stock of gold continues to create a powerful wealth effect for Indian households, which is being further reinforced by lower interest payments, monetary easing, and higher disposable incomes following tax cuts.
Indian households hold an estimated $3.8 trillion worth of gold, equivalent to about 88.8 per cent of the country’s GDP, according to Morgan Stanley. The brokerage said this vast store of wealth is providing a positive wealth effect to households, even as macroeconomic stability keeps the flow of new gold demand largely range bound.
With gold prices at record highs of $4,056 an ounce globally and around Rs 1,27,300 per 10 grams domestically, prices have surged 54.6 per cent in dollar and 61.8 per cent in rupee terms so far this year. Morgan Stanley noted that India remains the world’s second-largest consumer of gold, accounting for roughly 26 per cent of global demand, behind China’s 28 per cent. While household consumption continues to dominate, central bank purchases have also risen at the margin — the Reserve Bank of India (RBI) has added about 75 tonnes of gold since 2024, taking its total holdings to 880 tonnes, or around 14 per cent of India’s total foreign exchange reserves.
As per World Gold Council (WGC) data cited by the brokerage, gold consumption in value terms has climbed to $68 billion on a four-quarter trailing basis as of June 2025. In volume terms, however, consumption remains stable at around 767 tonnes, far below the 2011 peak of 1,145 tonnes.
Morgan Stanley highlighted that a benign inflation trend—averaging 5 per cent year-on-year since the adoption of the flexible inflation targeting framework in 2016—and positive real interest rates (averaging 1.7 per cent since post-pandemic policy normalisation) have kept gold imports contained at 1–1.5 per cent of GDP, significantly lower than the 3.3 per cent of GDP seen in May 2013. This macro stability has helped prevent an excessive tilt toward physical assets, easing pressure on the current account deficit.
The report said gold acts as a critical buffer in the household balance sheet. By Morgan Stanley’s estimates, households own around 34,600 tonnes of gold, or $3.8 trillion in value, providing a significant cushion to household wealth amid rising prices. It added that household preference for financial assets remains intact, with gold ETF inflows amounting to $1.8 billion over the past 12 months.
According to Morgan Stanley, stable inflation and positive real rates have kept gold demand contained while encouraging a shift toward financial savings. However, the existing stock of gold continues to create a powerful wealth effect for Indian households, which is being further reinforced by lower interest payments, monetary easing, and higher disposable incomes following tax cuts.