How Indian consumers are investing in gold via varied means
In the recent past, gold has made global headlines as its prices have hit record highs at frequent intervals. As economic and geopolitical uncertainties continue to cloud the horizon, the precious metal’s status as a safe haven for investors remains strong as ever. With access to a wide range of physical and digital gold products through convenient platforms, the industry continues to witness a strong and sustained demand for the yellow metal, especially from younger, first-time investors.
Overview of the gold-buying landscape
Of course, one cannot overlook the fact that Indian consumers, particularly women, hold an estimated 24,000 tonnes of gold jewellery. This number equals almost 40 per cent of India’s GDP, exceeding the combined gold reserves of the US, Russia, Italy, France and Germany.
Considering the yellow metal’s cultural and emotional significance for Indian families, rising prices have not wholly deterred the purchase of gold in its varied forms. But discerning buyers and investors are opting for smaller quantities with higher values. Given the prevalent situation, consumers are inclined to purchase lesser amounts of purest gold and silver minted coins and bars with traditional motifs at 999.9+ purity and digital gold. The shift to investment-level purchases indicates consumers are now financially aware.
Today, changing consumer preferences have made physical gold and digital gold the top investment trends. Minted gold products are purchased for gifting, social occasions such as weddings, naming ceremony and religious significance, which can be passed down generations as a safe haven asset. Additionally, unlike gold jewellery, which comes with an average of 10-12 per cent making charge, minted gold products have a minimal making charge at 3-5 per cent, depending on the retailer, which adds more value to the purchase. Similarly, digital gold is a popular investment choice among young investors because of its ease of access, liquidity and transparency. It is also perceived to be a safe hedge in times of volatility and inflation. Additionally, young investors like non-wearable types of gold that can be managed, stored and traded easily.
Understanding the pros and cons of various options
A brief comparison of its various forms will help highlight the pros and cons of each:
Minted coins and bars: Addressing the various spiritual and religious aspects of our society, minted coins and bars often come with traditional motifs and modern designs, catering to the various demographics. Choosing the purest gold and silver minted products at 999.9+ purity provides a value addition to the purchase. Such minted products come with an Assayer-signed certicard and LBMA-accreditation, ensuring the highest purity and positive weight tolerance.
Jewellery: Physical gold has retained its charm as a gift on traditional occasions like weddings, birthdays, anniversaries and other memorable days. As a tangible asset, it is prized for its cultural significance and passed down as a family heirloom across generations. Yet, storing physical gold safely is challenging. Also, it has limited liquidity. Further, its investment quotient is low. The sale of physical gold generally results in some loss via non-recoverable making charges (varying from 10 to 25%) and markdowns for resale (5 to 10 per cent).
Digital gold: Unlike other alternatives, digital gold permits investment for as low as ₹1 through various channels. Stored physically in secure vaults and insured, it can be redeemed as physical gold at the market price or minted coins and bars. This form draws young and first-time investors. Since it provides 8 to 9 per cent annual returns, almost at par with ETFs and better than jewellery, small-ticket investors find it especially appealing. Further, its ease of purchase, sale and records maintenance makes it more tax-compliant and accessible, even in rural and semi-urban regions.
Gold ETFs: Conversely, investors find gold ETFs attractive due to their hassle-free investment. As these funds are listed on the stock exchanges, they provide high liquidity and transparency while being aligned with global prices. Each unit of gold ETF represents one gram stored safely in highly secure vaults. Therefore, investors don’t have to worry about theft or safe storage issues. In FY2024-25, domestic gold ETFs recorded major inflows amounting to Rs 14,948 crore, almost thrice that of the previous year. In the previous decade, India’s gold ETFs had a yearly return of approximately 11.4 per cent. Leading gold ETFs have consistently outshone jewellery in terms of returns. Backed by its transparent audit trails, ETFs also simplify tax reporting for LTCG purposes.
Gold MFs: Without any requirement for a demat account, gold mutual funds work by investing in multiple ETFs or gold-linked assets, as most gold mutual funds in India operate as ‘fund of funds.’ Consequently, they constitute an excellent option for investors seeking managed exposure without worrying about tracking prices daily. Although their expense ratios remain somewhat more than those of direct ETFs, they are professionally managed.
In a nutshell
Ultimately, choosing the right option for investing in this precious metal depends on each investor’s goals and personal preferences. Those looking to purchase for gifting or commemorative reasons could opt for jewellery, gold bars and coins. New investors wanting an easy, user-friendly way to invest could choose digital gold. Those aiming for a mix of liquidity, compliance and performance can go for ETFs. People wanting to invest in gold with minimum intervention may prefer MFs. Given the current geopolitical environment and its safe-haven image, gold will continue to glitter for Indian investor.
The author is Managing Director and CEO, MMTC-PAMP
Published on February 21, 2026