Loans backed by gold are those that are issued in this amount and have a precious metal backing. Most of them are issued in the form of bonds by state-owned financial institutions. It is a gold standard-based system and bonds are linked to gold in national or foreign currencies.

A gold loan is a secured loan where a borrower pledges gold jewellery or coins as collateral to receive funds from a lender. The loan amount depends on the purity and weight of the gold, along with current market prices. One key benefit of a gold loan is quick access to cash, since approval and disbursement are usually fast with minimal paperwork. Interest rates are often lower than unsecured loans because the lender holds physical security. Borrowers can use a gold loan for personal needs, business expenses, education, or emergencies. Repayment options are flexible, allowing interest-only payments, partial repayments, or full settlement at maturity. If the borrower fails to repay, the lender has the right to auction the gold to recover dues. Gold loans are popular because they let people unlock value from idle assets without selling them.