The Rise of Gold in Turkey Doubles the Wealth of Turks and Complicates the Battle Against Inflation

The wealth of Turks from gold holdings has increased by about 300billiondollars in 2025, driven by record prices of the precious metal, making the value of this wealth almost equal to half the size of the Turkish economy.

This record growth in gold wealth complicates the government's efforts to control inflation, which has exceeded 30%, and has led to a slowdown in the pace of interest rate cuts.

With global gold prices rising to record levels since last summer, the total value of gold holdings in Turkey has surpassed 750billiondollars, a very high figure compared to global standards, especially since Turkey's GDP is around 1.57trilliondollars.

The Turkish Central Bank clarified that about 600billiondollars of these holdings are kept by households and businesses outside the banking system, reflecting the long-standing tradition among Turks of using gold as a safe savings method.

The rise in the value of gold coins, jewelry, and gold artifacts throughout the year has encouraged increased spending, despite high annual inflation rates, according to estimates from economists and the central bank, which slows the path to curb inflation and delays interest rate reductions.

The price of gold reached 5000dollars per ounce last month, driven by trade and geopolitical disruptions.

In Istanbul, a 21-year-old air conditioning technician named Furkan said: "I have been investing in gold for a year and buy it piece by piece whenever I save money... I think prices will rise further, and I plan to buy a car."

Turkey ranks first among countries with high gold ownership rates among households, alongside India, Germany, and Vietnam.

The central bank noted that housing prices have risen significantly in areas with high gold ownership compared to other areas since the last quarter of 2023, when global prices began to rise.

The bank added:

"When households use their wealth linked to gold to buy homes without relying on credit, demand remains strong even under difficult financial conditions, which is a clear indicator of the impact of wealth."

For his part, Asim Gursel, a gold shop owner in Istanbul, stated that customers have shifted over the past year to selling gold to buy cars and homes, instead of the traditional practice of selling homes to buy gold.

In a less-than-expected move, the central bank cut the main interest rate by 100 basis points to 37% in January, following a monthly increase in consumer prices of about 5%, while raising its inflation expectations for the end of the year.

January alone saw a rise in gold prices of about 25%, which increased the wealth of Turks fond of the yellow metal by approximately 80billiondollars, bringing the total annual wealth increase to 300billiondollars.