Indians have long cherished gold not just as an investment but as a representation of affluence, safety, and family heritage. The tradition of owning physical gold, from bridal adornments to festive jewelry, has been deeply ingrained in India’s cultural tapestry. However, a noticeable shift is now underway.
In recent times, an increasing number of Indians are opting for financial gold instruments such as Gold Exchange Traded Funds (ETFs) and Sovereign Gold Bonds (SGBs) over physical gold purchases. This change is primarily fueled by factors like convenience, security, and evolving investor preferences.
In October 2025, India ranked third globally in terms of gold ETF inflows, trailing behind only the United States and China. This development signifies a redefinition of the Indian populace’s affinity towards gold in the digital age.
Dr. Renisha Chainani, Head of Research at Augmont, highlighted that the growing inclination towards financial gold products is driven by various reasons. She emphasized the appeal of lower transaction costs, ease of storage, and immediate liquidity provided by ETFs and SGBs compared to acquiring physical gold bars or coins.
According to Ross Maxwell, Global Strategy Lead at VT Markets, convenience and cost-effectiveness are pivotal factors in this transition. He noted that financial gold products mitigate storage, security, and certification concerns associated with owning physical gold. ETFs offer enhanced liquidity, flexibility, and transparency, facilitating real-time price discovery and seamless portfolio integration.
The surge in gold ETF inflows in India in October 2025 mirrors both global and domestic trends. Economic uncertainties, inflationary pressures, and geopolitical risks have bolstered gold’s reputation as a safe haven asset. Additionally, the accessibility of ETF products through digital platforms has made them more appealing to Indian investors, particularly the younger demographic.
Both experts concur that tech-savvy, younger investors are spearheading the shift towards financial gold instruments. While millennials and Gen Z favor app-based gold investing, older investors are gradually diversifying their portfolios with paper gold for its liquidity and tax advantages.
From a tax and returns perspective, SGBs offer an extra 2.5% annual interest, enhancing overall returns beyond gold price movements. Dr. Chainani highlighted the tax benefits of SGBs, which are tax-exempt upon redemption at maturity, unlike ETFs that are subject to long-term capital gains tax based on the holding period.
In conclusion, the evolution of India’s gold investment landscape reflects a blend of tradition and modernity. While digital gold products are gaining traction for their efficiency and benefits, physical gold will continue to hold a significant cultural and sentimental value in Indian society. The ongoing digitalization of gold ownership, coupled with increased awareness of financial gold’s advantages, signifies a progressive transformation in India’s relationship with this precious metal.