Currently, amid multiple trade and geopolitical wars across the globe, the uncertainty is at its peak. That makes a case for buying gold as it is considered a safe haven against uncertainty. The US–Iran conflict has led to crude oil prices and shipping costs spiralling, which could drive inflation higher. That again makes a case for buying gold as it is considered a hedge against inflation. Gold can be bought in various forms: physical and digital formats. In this article, we will look at the different ways of buying gold.
How did gold perform in 2025?
In 2025, gold delivered spectacular returns of more than 70%, outperforming other asset classes such as equities, fixed income, and real estate. Investors who bought gold earlier and held on to it are enjoying its returns. However, many investors were left waiting on the sidelines. They kept waiting in the hope that gold prices would correct and they would get in at lower levels.
At the end of January and early February, gold prices did correct to some extent. After consolidating for some time, the prices started rising again. Many investors are wondering whether gold will repeat its spectacular 2025 performance in 2026. Well, that is a difficult question to answer.
The latest US–Iran conflict has led to investors flocking to gold as a safe haven. The uncertainty around the conflict and its repercussions is expected to keep gold prices elevated or push them higher if the conflict escalates. In 2026, the other reasons that may give confidence to gold bulls include:
- The continued uncertainty around US tariffs, with the US Supreme Court striking them down, and US President Donald Trump declaring fresh tariffs.
- The ongoing Russia–Ukraine war continues raging into its fourth year with no signs of peace.
- Central Banks across the globe continue to buy gold to diversify their assets away from the US dollar. For 3 years in a row (2022, 2023, and 2024), Central Banks bought more than 1,000 tonnes of gold annually. In 2025, the purchase was slightly lower at 863 tonnes, which is still significantly higher.
- The marriage season in India is expected to fuel the gold demand.
- There are fears of inflation rising globally if the US–Iran conflict prolongs and crude oil prices remain at elevated levels or spike further.
Ways to invest in yellow metal
In the earlier section, we understood the factors that can drive gold prices higher. Now, let us look at the various ways of investing in gold. You can buy physical gold in the form of coins/jewellery, or digital gold through ETFs/mutual funds.
Among investors, demand for digital gold remains very strong. As per AMFI data, in January 2026, gold ETFs saw inflows of ₹24,039 crore. For the first time ever, gold ETF inflows surpassed equity fund inflows ( ₹24,028 crore). It reflects the growing appetite for gold among institutional and retail investors. Let us look at some ways to invest in gold, starting with gold ETFs that have seen demand skyrocket.
Gold ETFs
A gold ETF is a financial security issued by a mutual fund house. It collects money from investors and invests it in physical gold on their behalf. The gold ETF units track the price of physical gold and are traded on stock exchanges like BSE and NSE. An investor can buy gold ETF units through their trading account by logging on to the broker’s website/mobile App. On trade execution, the investor’s demat account is credited with gold ETF units, and the bank/trading account is debited for the equivalent amount.
The minimum investment required is one gold ETF unit, each representing 0.01 gram of gold. Based on the current market price of gold, it costs between ₹130 and ₹150 to buy one gold ETF unit (equivalent to 0.01 gram gold), which is within the reach of most people across various income categories. There can be a price variation across gold ETFs offered by various mutual fund houses. Check the iNAV (indicative net asset value) of the gold ETF that you wish to buy.
You can hold gold ETFs in your demat account for any tenure. As part of asset allocation, you must allocate a specified percentage of your overall investment portfolio to gold and hold it for the long term. As you hold gold ETFs in digital format in your demat account, there are no storage charges (bank locker charges) or insurance costs for protection against theft or damage.
To sell your gold ETF units, you can place the sell order through your trading account by logging in to your broker’s website or App. On trade execution, the gold ETF units are debited from your demat account, and the sale proceeds are credited to your bank/trading account.
The difference between the selling price and purchase price is your capital gain. If you sell the gold ETF units within a year, the profit will be categorised as short-term capital gain (STCG). The STCG is added to your overall income and taxed at your income tax slab rate. If you sell the gold ETF units after a year, the profit will be categorised as long-term capital gain (LTCG). The LTCG is taxed at 12.5% without the indexation benefit.
Gold mutual funds (FoFs)
While gold ETFs are transparent, convenient, tax-efficient, cost-effective, etc., they don’t offer the systematic investment plan (SIP) option. Also, liquidity can be a challenge with some gold ETFs. Gold mutual funds provide a solution for these. Gold mutual funds, also known as gold fund of funds (FoFs), collect money from investors and invest it in gold ETF units.
An investor can make regular investments in gold through a gold mutual fund SIP. It helps invest a specified amount on a monthly basis for the long term to accumulate gold for financial goals, like accumulating gold for marriage.
Investing in a gold mutual fund doesn’t require a demat account. An investor can buy and redeem gold mutual fund units at NAV with the AMC at any time. The minimum investment amount starts from as low as ₹100, within reach of most individuals across all income categories.
Gold coins and bullion
Physical gold in the form of coins and bullion provides direct, tangible ownership with immediate possession. They can be bought in various denominations, usually starting from 0.5 grams. Physical gold removes the expense ratio cost associated with gold FoFs, and the broking and demat charges associated with gold ETFs. However, physical gold involves making charges, and you may have to incur bank locker charges and insurance premiums for safekeeping.
Gold jewellery
While gold coins and bullion are for investment, gold jewellery serves the dual purpose of investment and consumption. Jewellery can be worn on occasions such as festivals, family functions, and various celebrations. Some people regard jewellery as a symbol of social status or prosperity. However, jewellery may involve higher making charges than gold bullion. Many families pass on jewellery from one generation to another, adding to its appeal and emotional attachment.
Which is the best way to buy gold?
We have discussed the various ways of buying gold. The best way to buy gold will be the one that suits your needs. If you have a demat account and want to buy gold in digital format with complete control over buying and selling, you may consider gold ETFs. If you want to invest a specific amount every month through SIP mode, you may consider gold mutual funds.
If you want to buy it for investment purposes with direct, tangible ownership, you may consider gold coins or bullion. Finally, if you want to buy it for investment and consumption purposes (wearing it on various occasions), you may consider gold jewellery. Whichever way you choose to buy gold, consider the costs involved, the convenience of buying/selling, safekeeping, liquidity, etc.
Gopal Gidwani is a freelance personal finance content writer with 15+ years of experience. He can be reached on LinkedIn.
