By Nevzat Devranoglu and Ezgi Erkoyun
ANKARA, Feb 27 (Reuters) – Gold‑loving Turks grew $300 billion wealthier in the past year as record prices swelled the value of their holdings to nearly half the size of Turkey’s economy, but the resulting resilience in domestic demand has slowed the country’s already difficult fight against inflation.
With global bullion soaring to all-time highs since the summer, the total value of Turkey’s gold stock has climbed to more than $750 billion, which is exceptionally high by global standards considering Turkey’s GDP of about $1.57 trillion.
The central bank says $600 billion of that stock is “under‑the‑mattress”, or “under-the-pillow” in Turkish: gold held by households and companies outside the banking system, reflecting a long tradition of Turks holding tight to the metal as a safe, portable, tangible store of wealth.
The doubling of the value of these coins, bangles and other gold pieces in a year has encouraged spending, despite annual inflation above 30%. Economists and the central bank say this has complicated a disinflation path, prompting slower interest rate cuts.
CONFIDENCE TO SPEND
Gold hit $5,000 an ounce last month, driven by trade disruptions and geopolitical instability.
For Turks, the global gold rush marks some relief after a nearly decade-long inflation and currency crisis at home that slashed their earnings and savings.
“I’ve been investing in physical gold for a year, buying it piece by piece whenever I save up,” said 21-year-old air conditioning technician Furkan as he used cash to buy a gram of gold at an Istanbul shop. “I believe prices will rise even further. I’m planning to buy a car.”
Turkey has among the highest levels of household gold ownership alongside India, Germany and Vietnam.
The precious metal, given as gifts at weddings and passed down through generations, is a hedge against inflation and lira depreciation, and a permissible investment under Islamic tradition that spurns interest-bearing banking.
Beyond what is under the pillow, Turkish banks store some $80 billion of the metal in bank deposits and investment funds, while the central bank owns about $80 billion in reserves, data show.
CENTRAL BANK SLOWED RATE CUTS
In a recent blog post, the central bank flagged that housing prices have risen markedly more in provinces with a higher share of gold deposits than elsewhere since the last quarter of 2023, when global bullion prices started to climb.
When households use gold-related wealth to buy homes without relying on credit, “demand remains strong even amid tight financial conditions”, it said, calling this a “clear sign of a wealth effect”.
Asim Gursel, a gold shop owner in Istanbul, said that over the past year customers were increasingly selling gold to buy cars or first homes in a reversal from past practices when they were largely selling homes to buy gold.
The central bank cut its key rate by a smaller-than-expected 100 basis points to 37% in January, when monthly consumer prices soared nearly 5%, and it has since raised year-end inflation forecasts.
Gold prices jumped almost 25% in January alone, when the wealth effect in Turkey amounted to $80 billion – capping a year in which it totaled $300 billion.
Item Amount ($ bln)
“Under‑the‑mattress” gold 600
Gold deposits in banks 80
and funds
Central bank-owned gold 80
reserves
TOTAL GOLD STOCK 760
Turkey GDP (end-2025 1,565
estimate, nominal USD)
Gold stock / GDP ratio 48.5%
(Reporting by Nevzat Devranoglu in Ankara and Ezgi Erkoyun in Istanbul; Editing by Daren Butler, Jonathan Spicer and Andrei Khalip)
