India’s Gold Wealth Exceeds GDP, But Spending Impact Limited: UBS

Gold prices have surged sharply in 2026, crossing the landmark USD 5,000-an-ounce level for the first time and peaking at USD 5,111. The rally has significantly boosted the notional wealth of Indian households, which collectively hold the world’s largest stock of gold. However, according to UBS, the surge in gold prices is unlikely to translate into a meaningful boost to household consumption.

UBS expects gold prices to remain elevated in the near term. “We expect new highs over the next couple of quarters, followed by prices tapering off and stabilising at higher levels further out,” said Joni Teves, Precious Metals Strategist at UBS Global Research.

While UBS’s base case assumes the gold bull cycle will begin to mature later in the year as the US Federal Reserve nears the end of its easing cycle, Teves flagged upside risks. “We see rising upside risks, with gold potentially averaging as high as USD 5200/oz in 2026,” she says.

India, which was the world’s largest gold consumer until 2013 and is now second only to China, has seen household wealth swell sharply due to the price rally. According to UBS estimates, Indian households hold around 28,000 tonnes of gold, including temple holdings, representing about 14 per cent of global gold stock. At current prices, this stock is valued at approximately USD 4.5 trillion, which is more than India’s estimated nominal GDP of USD 4 trillion in FY26E.

Despite this dramatic rise in household wealth, UBS argues that the consumption impact is muted. “The gold-related wealth effect seems less effective to support broader household consumption,” says Tanvee Gupta Jain, Chief India Economist at UBS Securities.

Jain says that Indian households generally prefer not to sell gold, which is mostly held as jewellery, even when prices are high. This reluctance reflects gold’s cultural significance as well as its role as a safe haven and financial safety net.

As a result, the surge in gold prices has not replicated the consumption boost seen during periods of strong equity market returns. UBS also expects consumer demand for gold to soften as prices remain elevated.

“In our base case, we estimate India’s gold demand (jewellery and retail investment) to moderate to around 670 tonnes in FY26 (-15 per cent YoY) from 780 tonnes in FY25, largely led by lower jewellery demand,” says Jain. For FY27, demand is expected to stabilise at around 650 tonnes, with investment demand remaining a key driver.