India’s hidden gold stash hits record $3.8 trillion after 62% rally in 2025: Morgan Stanley

India’s household gold wealth has exploded to an estimated $3.8 trillion, following a spectacular 62% rally in 2025 that has pushed the value of the country’s privately held gold to nearly 89% of its GDP, a staggering testament to the metal’s enduring grip on household balance sheets and its growing role as a store of wealth amid global uncertainty.

The surge has delivered a powerful wealth effect for families traditionally invested in physical assets, even as consumption volumes remain steady. With gold prices touching record highs above $4,000 per ounce globally this week and around ₹1.27 lakh per 10 gram domestically, Indian households are quietly sitting on one of the world’s largest private troves of the precious metal — worth more than three times their equity holdings.

Morgan Stanley estimates that Indian households collectively hold about 34,600 tonnes of gold as of June 2025, making the country the world’s second-largest consumer after China. Gold holdings among Indian households at current market value are about 3.1 times the current equity stock holding of $1,185 billion, according to the report.

While India’s annual gold consumption has been largely range bound between 750-840 tonnes since 2021, meaningfully lower than its peak of 1,145 tonnes in June 2011, the sharp acceleration in domestic gold prices has pushed consumption in value terms to a fresh all-time high. Gold consumption sky-rocketed to $68 billion on a four-quarter trailing basis in June 2025, versus $44 billion in June 2023, according to Morgan Stanley. The earlier peak of $55 billion was reached in June 2013, driven by strong volume trends of 1,067 tonnes.

On a year-to-date basis, gold prices have accelerated 54.6% globally, while domestic prices advanced about 62%, partly due to rupee depreciation. The rupee has weakened 3.8% year-to-date, further amplifying domestic prices and rupee-denominated returns.

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India accounts for 26% of global gold demand

According to the World Gold Council, India accounts for approximately 26% of the world’s global gold demand as of June 2025 on a four-quarter trailing basis, versus a five-year average of 23%, second only to China with a share of approximately 28%. While jewelry comprises the bulk of demand for gold in India with a two-thirds share, the share of retail investment instruments like bars and coins has picked up over the last five years from 23.9% in June 2020 to 32% in June 2025.
As India’s domestic gold production is negligible at approximately 2% of total demand — Hutti Gold Mine in Karnataka is the country’s main operational gold mine — it relies heavily on imports from countries such as Switzerland, UAE, and South Africa, making it the second-largest importer of gold after China.

Safe haven demand amid global turmoil

Past episodes indicate a similar surge in prices at times of emergency or crisis, such as the global financial crisis in 2008 and the Covid-19 pandemic in 2020, led by an exponential increase in demand for the safe-haven asset. Globally, exacerbated geopolitical tensions as a result of the US government shutdown and political crisis in France have contributed to volatility in global financial markets. The ongoing rate easing by the Fed, which is expected to continue in the coming months, along with a weakening dollar, has acted as another trigger for the uptick in gold prices.

A key structural driver has been the increasing relevance of gold as a reserve asset, encouraging central bank buying amid persisting global uncertainty. Central bank holdings of gold nearly doubled worldwide over the past decade. India, in particular, has steadily increased its holdings of gold reserves to 14% in September 2025, from 8.1% in September 2023.

Gold vs stocks

Despite the wealth effect from gold, Morgan Stanley notes that lower inflation coupled with positive real rates has kept gold demand range bound, with incremental household saving preference shifting in favor of financial assets. Within household financial savings, the share of deposits has moderated to 35% in fiscal 2025 from 40% in fiscal 2024 and 46% pre-pandemic, while equities has edged up to an all-time high of 15.1% in fiscal 2025 from 8.7% in fiscal 2024 and approximately 4% pre-pandemic.

Morgan Stanley strategist Ridham Desai expects these trends to be sustained, with the share of equity in the household balance sheet to accelerate further, led by favorable demographics, increasing investor education, a low starting point of domestic equity ownership, policy change allowing retirement funds to buy stocks since 2015, and an improved regulatory environment. Desai expects the ratio of the value of equity to gold holdings to likely exceed one in the coming years from just 0.3 currently.

“As the trends of financialisation and formalisation of the economy are becoming more entrenched, diversification of household savings to market-linked products is gaining prominence, especially with the retail investors,” the Morgan Stanley report noted.

The bank believes the trend toward financial assets will be sustained, given that policy makers are focused on maintaining macro stability. At the same time, the stock of holdings of gold provides a positive wealth effect to the household balance sheet, which is also benefiting from cyclical factors of lower interest payments with monetary policy easing, and the positive impact on disposable income through direct and indirect tax cuts.