Because gold loans are backed by physical collateral (your gold jewellery or coins), lenders generally offer meaningfully lower interest rates than personal loans, along with faster processing since there's less need for extensive credit checks — the gold itself substantially de-risks the loan for the lender. Loan-to-value is typically capped at a regulated percentage of the gold's market value, which determines your maximum loan amount.
Personal loans, being unsecured, rely heavily on your credit score and income profile to determine both eligibility and interest rate, which is usually meaningfully higher than a gold loan's rate for a comparable amount, precisely because the lender has no collateral to fall back on if you default.
The trade-off is risk of a different kind: with a gold loan, failure to repay means risking the physical gold you've pledged, whereas a personal loan default primarily damages your credit score and invites collection proceedings rather than immediately risking a specific physical asset. If you have gold sitting idle and need funds at a lower cost, a gold loan is usually the cheaper option — but only if you're confident about repaying and not risking sentimental or family jewellery.