Gold's Surge: Richer Indian Households, Yet Minimal Spending Impact

The recent surge in gold prices has notably elevated the net worth of Indian households, pushing it to an impressive Rs 3.24 trillion, according to Systematix Research. This dramatic rise, attributed to a doubling in gold prices since 2024, underscores the substantial influence of gold on national household wealth.

The report indicates that Indian families collectively hold approximately 24,000 tons of gold, equivalent to 11 percent of the global gold reserves in the form of jewellery. Despite this wealth increase, Systematix Research notes that household spending patterns remain largely unchanged, with gold's rising value having a negligible impact on actual consumption.

Real income continues to be the dominant factor influencing consumption growth. The report reveals that for every 100 basis point increase in real income, consumption typically rises by about 65 basis points. The minimal effect of gold's asset gains on consumption is explained by several factors, including rural households' spending habits and gold's role as a contingency asset.