New Delhi: In the past year, gold has delivered massive gains to Indian investors. On 11 September 2024, the price of 24-karat physical gold stood at around Rs 73,200 per 10 grams. One year later, it has surged to Rs 1,12,500 per 10 grams — a jump of nearly 54 percent.
Gold ETFs have mirrored this rally too. Over the last 12 months, these exchange-traded funds have offered average returns of up to 50 percent. August 2025 alone saw a net inflow of Rs 2,189.5 crore into gold ETFs — the fourth consecutive month of inflows. According to AMFI, their assets under management (AUM) hit a record Rs 72,495 crore, marking a 74 percent jump in investment flows for August.
What is a Gold ETF & How It Works
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A Gold ETF (Exchange Traded Fund) is a stock-market instrument that tracks the price of gold. If gold prices rise, your ETF units go up in value too. Investors can buy or sell these ETFs any time during market hours through a demat and trading account — just like shares.
Benefits of Investing in Gold ETFs
Safety: No need to store physical gold; no risk of theft or purity concerns.
Transparency: Prices are listed on the exchange and easy to track.
Liquidity: Buy or sell anytime during trading hours.
Low Entry Barrier: Start with a small investment amount.
Risks of Gold ETFs
Linked to stock market movements, so subject to short-term volatility.
Expense ratio (fund management fee) slightly reduces returns.
Potential loss if gold prices decline in the long term.
Physical Gold vs Gold ETFs
Traditionally, Indians prefer physical gold — jewellery, coins or biscuits — especially for weddings and family events. But it involves storage, making charges, and purity checks. Gold ETFs, on the other hand, offer a modern, hassle-free way to invest without these issues.
Other Ways to Invest in Gold
Physical Gold – Jewellery, coins, biscuits.
Gold ETFs – Units traded on exchanges via demat accounts.
Gold Mutual Funds – Indirect investment in ETFs.
Sovereign Gold Bonds (SGBs) – Government bonds that also pay interest.
Key Takeaway for Investors
Both physical gold and gold ETFs have rewarded investors handsomely over the past year. Physical gold suits emotional or traditional needs, while ETFs offer convenience and security for modern investors.
However, don’t invest based only on past returns. Gold prices depend on global markets, dollar-rupee exchange rates, and geopolitical tensions. Always assess your goals, time horizon, and risk appetite before investing.
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