Loans against gold surge 125% in 2025 as bullion prices soar 60% in a year
As Gold Prices Rise, Borrowers Pledge Jewellery Instead of Selling
 "Loans against gold surge 125% in 2025 as bullion prices soar 60% in a year")
Growth in personal loans emerged as the strongest pocket of non-food credit in November 2025, rising 12.8% year-on-year, driven overwhelmingly by a sharp acceleration in loans against gold jewellery, according to the Economic Survey 2025-26.
Data shows that gold-backed loans jumped 125.3% year on year, making them one of the fastest-growing components within retail credit. The surge coincides with a sustained rise in gold prices, which has significantly increased the collateral value of household gold holdings and expanded borrowing capacity without requiring asset sales.
Among major sectors—agriculture and allied activities, industry, services, and personal loans—retail credit outpaced all others in 2025.
"In terms of sectoral deployment of non-food credit, among the categories of agriculture and allied activities, industry, services and personal loans, the highest YoY growth has been observed in personal loans, with an increase of 12.8 per cent in November 2025. A significant factor contributing to this growth is a substantial rise in loans against gold jewellery, which have increased by 125.3 per cent (YoY), likely due to the increasing prices of gold," the survey said.
Gold prices climbed from $2,607 to $4,315 per ounce in 2025, a gain of nearly 66%, driven by a weakening US dollar, expectations of persistently negative real interest rates, and heightened geopolitical and financial tail risks.
While the surge in gold-backed lending has supported retail credit growth, it also introduces sensitivity to price movements in the underlying asset.
A sharp correction in gold prices could compress collateral buffers and increase repayment pressure for borrowers who have maximised loan values at elevated price levels. Regulators and lenders typically mitigate this risk through conservative loan-to-value norms, but sustained volatility in gold prices remains a key variable.