How India’s 25,000 tonnes of household gold acts as an economic buffer

India’s vast household gold stockpile, estimated at around 25,000 tonnes, has emerged as a crucial macroeconomic shock absorber, helping support currency stability, financial resilience, and household consumption at a time of heightened global uncertainty, according to IIFL Capital’s Outlook 2026.

The report estimates that the market value of household gold is now close to 80 per cent of India’s GDP, reflecting decades of accumulation and a sharp surge in gold prices over the past year. This latent wealth, IIFL Capital said, provides an important buffer for the economy during periods of stress.

“Consumption has been supported by tax cuts, and growth should revert to normal levels,” the report noted. “Indian households hold around 25,000 tonnes of gold, and the proportion used as collateral remains very low.”

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The analysis highlighted that gold-backed lending has significant headroom for growth, given the limited use of household gold as collateral so far. This creates scope for secured lending to households, which can help stabilise demand when income growth slows or borrowing costs rise.

“Lending is not to the aggregate economy but to families,” the report said, adding that the scale of gold collateral at the economy-wide level strengthens the prospects for sustained household consumption.

The report also pointed out that the Reserve Bank of India (RBI) stepped up its gold purchases in 2025, coinciding with a strong rally in global gold prices, reinforcing confidence in gold as a strategic asset.

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According to IIFL Capital, household gold acts as “latent capital” available in times of stress but not fully drawn down during economic upswings thereby enhancing India’s financial resilience and cushioning the economy against external shocks such as volatile capital flows and currency pressures.

As global uncertainty persists, the report suggests that India’s deep-rooted gold savings culture continues to play a quiet but critical role in underpinning macroeconomic stability.