Household Gold Value Crosses $5 Trillion! Higher Than India’s GDP - Why Even RBI Is Stockpiling the Yellow Metal

The value of gold held by Indian households has surged to an unprecedented level, driven by a sharp and sustained rally in gold prices that has outpaced most analyst forecasts. Recent estimates suggest Indian households collectively own nearly 30,000 tonnes of gold, which at current prices is valued at around $5 trillion—a figure that now exceeds India’s nominal GDP. According to the IMF’s World Economic Outlook (October 2025), India’s nominal GDP for 2025–26 (financial year ending March 2026) is projected at $4.125 trillion. While the comparison is striking, it is important to note that GDP measures the value of goods and services produced in a year, whereas household gold represents a stock of accumulated wealth. Fluctuations in gold prices inflate

or deflate this value without reflecting real economic productivity.Even so, the sheer scale of privately held gold in India represents one of the largest concentrations of household wealth anywhere in the world.Why Gold Prices Have Risen So SharplyThe dramatic rise in household gold value is largely a result of soaring prices. In 2025 alone, gold prices jumped nearly 65%, defying conventional forecasts.According to Praveen Singh, Head of Commodities at Mirae Asset Sharekhan, gold’s rally is being driven by deep structural shifts rather than short-term cycles. These include:

• Erosion of trust in fiat currencies and government bonds
• Fiscal stress in major economies such as the US, UK, and Japan
• Concerns over the independence of the US Federal Reserve amid political pressure
• Weakness in the US dollar and its increasing use as a geopolitical tool
• China’s struggling property sector
• Inflation-hedge demand and central banks following fiscally dominant monetary policies
• Rising geopolitical tensions and uncertainty over the dollar’s reserve-currency status

Singh notes that the global system is moving toward a new monetary order in which gold plays a more central role in trade, reserves, and policy frameworks. As traditional alliances weaken and nations seek strategic autonomy, gold—both a monetary and strategic asset—has benefited disproportionately.Gold’s rise, he adds, reflects profound changes in global economics and geopolitics, pushing investors and central banks alike toward the world’s oldest store of value.The Role of Household Gold in IndiaExperts point out that while gold is a culturally preferred savings instrument in India, it is largely a non-yielding and traditionally unproductive asset.Ranen Banerjee, Partner and Leader, Economic Advisory Services at PwC India, describes household gold as a financial hedge for emergencies rather than an engine of growth. However, he notes that some of this gold has begun entering productive channels through gold loans and related financial products.Global asset managers echo this distinction. BlackRock CEO Larry Fink recently observed that while gold is an effective global hedge and diversifier, it does not allow investors to participate in India’s growth story. Equities, he argued, are better aligned with the country’s long-term economic expansion, whereas gold largely tracks global fear, currency debasement, and uncertainty.Still, economists highlight the macroeconomic significance of this massive stock of gold. Sujan Hajra, Chief Economist at Anand Rathi Group, notes that even a gradual shift of household gold into formal channels—such as monetisation schemes, collateralised lending, or gold-linked savings instruments—could have meaningful economic impact.Not Just Households: RBI’s Growing Appetite for GoldGold’s appeal is not limited to households. Central banks worldwide are aggressively increasing gold holdings as a hedge against global risks and overdependence on the US dollar.The Reserve Bank of India (RBI) has significantly stepped up gold purchases in recent years. Over the past decade, India’s gold reserves have risen by nearly 58%. The composition of India’s foreign exchange reserves has also shifted: gold now accounts for over 17%, up from around 6–7% just a few years ago.Madan Sabnavis, Chief Economist at Bank of Baroda, describes RBI’s gold accumulation as a diversification strategy—one mirrored by many central banks globally.According to World Gold Council data, India now holds the eighth-largest gold reserves in the world, at about 880 tonnes—just over one-tenth of the United States’ holdings.Hajra explains that RBI’s gold is valued at international prices, which are lower than domestic Indian prices due to the absence of duties and levies. As a result, the rupee value of these reserves is modestly understated. Nevertheless, rising gold holdings strengthen India’s external balance sheet by enhancing diversification and resilience, while foreign-currency assets continue to provide liquidity for exchange-rate management.Gold as the New Global Uncertainty BarometerCentral banks, Hajra adds, do not accumulate gold for returns. Instead, gold offers safety, liquidity, and zero counterparty risk. Concerns over currency debasement, sanctions risk, and excessive concentration in dollar assets have driven global official-sector gold purchases to nearly 1,000 tonnes annually in recent years.Ranen Banerjee of PwC India sums it up succinctly: rising currency volatility, geopolitical uncertainty, and changing trade patterns require not just diversified trade baskets—but diversified reserves as well.As RBI Governor Sanjay Malhotra recently remarked, gold has become the new barometer of global uncertainty, much like oil prices once were. For both Indian households and central banks, the yellow metal is reclaiming a central role in an increasingly fragmented and volatile world.