India’s hidden stimulus: How a ₹33-lakh-crore gold stockpile could boost consumption

Indian households are sitting on an estimated US$3.9 trillion worth of gold, creating a potential wealth effect that could support consumption as gold prices remain elevated, according to Jefferies. The brokerage expects rising gold prices and increasing monetisation through gold loans to provide a fresh tailwind to economic activity.

India’s massive household gold wealth

Gold has long been a traditional store of value for Indian households, but its economic significance has increased sharply following the recent rally in prices. Jefferies estimates that domestic households hold around 25,000 tonnes of gold, worth about US$3.9 trillion as of March 2026.

“The wealth effect of rising Gold prices... Gold prices have sustained above US$4k/ounce for about a year, which has been good news for Indian households,” Jefferies said in its report, India’s Hidden Stimulus: The Gold Wealth Effect.

The value of household gold holdings has increased by around US$1.9 trillion over the past two years, dwarfing the estimated US$111 billion worth of gold held by the Reserve Bank of India.

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Jefferies noted that gold remains deeply embedded in household balance sheets despite the rapid growth of equity investments. During FY26, Indians invested US$96 billion in equities, including mutual funds and pension funds, while US$79 billion was spent on gold imports.

“Gold holdings are ~2x that of Bank deposits & ~4x stocks; and account for ~25% of total household wealth,” the brokerage said.

How rising gold prices can drive spending

The key economic transmission channel is the wealth effect. When the value of gold holdings rises, households can potentially increase spending, borrow against their gold or use the additional financial cushion to meet consumption needs.

Jefferies estimates that a 10% increase in gold prices could generate about US$400 billion in additional household wealth, alongside another US$20-25 billion in gold loans.

“Together this will be another ~80-100bps GDP / spending tailwind,” Jefferies said.

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The effect could be particularly important for rural and lower-income households, where gold ownership is widespread. Unlike equities, which are concentrated among a smaller section of households, gold is held across a much broader population.

“As a result, the Gold wealth effect could offer a buffer amid deficient monsoons and provide tailwind to bottom-of-pyramid consumption,” Jefferies said.

Gold loans add another stimulus channel

Gold is also increasingly being converted from a dormant store of wealth into a source of liquidity. Gold loans stood at an estimated US$197 billion in March 2026, having grown around 73% in US dollar terms over two years and accounting for about 7% of total bank and NBFC credit.

Yet Jefferies estimates that only around 15% of household gold holdings are currently monetised, leaving considerable headroom for further lending.

The brokerage, however, cautioned that the wealth effect comes with a macroeconomic trade-off. India’s gold imports rose from US$36 billion in FY23 to US$79 billion in FY26, equivalent to about 2% of GDP, putting pressure on the current account.

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