Gold’s ascent has delivered a substantial windfall to Turkish households and businesses, increasing the market value of privately held bullion by about $300 billion over the past year, according to official tallies. That rise has pushed the total worth of the country's gold stock to in excess of $750 billion - a sum that approaches roughly half the size of Turkey’s economy.
The central bank has highlighted that roughly $600 billion of this metal is held outside the formal banking system - colloquially described as being "under-the-mattress" or "under-the-pillow" - reflecting deep cultural preferences for owning physical gold as a store of wealth. The remainder is split between bank deposits and investment funds, and the central bank’s own reserves.
The sharp increase in the value of coins, jewelry and other physical forms of gold has reinforced household purchasing power in spite of sustained high inflation. Economists and policy officials point to that reinforced purchasing capacity as a complicating factor in the central bank’s disinflation efforts, arguing that stronger demand financed by gold-related wealth reduces the impact of tighter financial conditions.
Local behavior and cultural context
Gold ownership in Turkey is widespread, comparable to levels seen in countries such as India, Germany and Vietnam. The metal serves multiple social and financial functions: it is a traditional wedding gift, a family heirloom passed between generations, and a noninterest-bearing asset consistent with Islamic preferences against interest-bearing banking. These characteristics have kept gold a preferred hedge against inflation and lira depreciation.
At a shop in Istanbul, a 21-year-old air conditioning technician, Furkan, described buying physical gold bit by bit over the past year with cash savings. He said he expects prices to climb further and plans to use his gold purchases as a stepping stone toward buying a car. Such examples underline how rising bullion values have encouraged households to convert gains into durable goods and property purchases.
Magnitude and distribution of holdings
Publicly available data indicate that beyond the estimated $600 billion held outside banks, Turkish financial institutions hold approximately $80 billion of gold in deposits and investment funds, while the central bank’s own gold reserves are about $80 billion. Those figures are reflected in aggregated totals published alongside nominal GDP estimates, which show a gold-stock-to-GDP ratio approaching half of the economy.
| Item | Amount ($ bln) |
|---|---|
| "Under-the-mattress" gold | 600 |
| Gold deposits in banks and funds | 80 |
| Central bank-owned gold reserves | 80 |
| TOTAL GOLD STOCK | 760 |
| Turkey GDP (end-2025 estimate, nominal USD) | 1,565 |
| Gold stock / GDP ratio | 48.5% |
Monetary policy and housing markets
Officials at the central bank have noted that housing price appreciation has been disproportionately larger in provinces where household gold holdings represent a greater share of local wealth, particularly since the final quarter of 2023 when global bullion began its climb. The bank argued that when households deploy gold-derived wealth to buy homes without relying on credit, aggregate demand remains robust "even amid tight financial conditions," characterizing this pattern as a "clear sign of a wealth effect."
Gold shop owners report behavioral shifts consistent with that observation: customers who previously sold property to buy gold are increasingly selling gold to finance purchases of cars and first homes.
Policy response and inflation dynamics
In January the central bank reduced its key policy rate by 100 basis points to 37% - a cut smaller than some market participants expected - at a time when monthly consumer prices had surged nearly 5%. The bank has since revised its year-end inflation forecasts upward. Policymakers and economists attribute part of the slower-than-anticipated easing in rates to the persistence of domestic demand supported by the gold-driven wealth effect.
On the international front, bullion soared to a record price last month, reaching $5,000 per ounce amid trade disruptions and geopolitical instability. That global rally fed into domestic valuations: gold prices increased almost 25% in January alone, producing an $80 billion boost in perceived household wealth that month and bringing the year-to-date aggregate gain to roughly $300 billion.
While the elevated value of privately held gold has softened the blow of high inflation for many Turkish households, it has also reduced the sensitivity of consumer demand to tighter monetary settings, complicating central bank efforts to steer inflation down. The balance between that privately held wealth and formal monetary policy continues to shape the policy debate.