Physical Gold or Gold ETFs: Which Should Investors Choose in 2025?

Gold has been on a remarkable run over the past year. In India, the price of 24-karat gold jumped from around Rs 73,200 per 10 grams in September 2024 to Rs 1,12,500 in September 2025—an increase of nearly 54%. Gold ETFs also kept pace, delivering up to 50% returns. Investor appetite for ETFs has been strong, with August 2025 alone seeing net inflows of Rs 2,189.5 crore. According to AMFI, total assets under management in gold ETFs hit a record Rs 72,495 crore, reflecting a 74% surge in inflows that month.

What Are Gold ETFs?

Gold Exchange Traded Funds (ETFs) are traded on the stock exchange and track the price of physical gold. Investors can buy or sell ETF units through demat accounts, much like shares, making them easy to access and liquid. Their value moves in line with gold prices.

Why Investors Prefer Gold ETFs

No storage worries or purity concerns

Prices are transparent and updated in real time

Easy to buy and sell during market hours

Suitable for both large and small investments

Possible Drawbacks of Gold ETFs

Subject to market volatility

Expense ratios slightly eat into returns

Returns fall if gold prices decline over time

Physical Gold: The Traditional Choice

Gold in the form of jewelry, coins, or bars remains deeply rooted in Indian culture. While it carries emotional and ceremonial value, it also comes with drawbacks like storage costs, making charges, and purity concerns. Yet, demand stays strong during weddings and festivals.

Other Gold Investment Options

Gold Mutual Funds: Invest mainly in gold ETFs

Sovereign Gold Bonds (SGBs): Government-backed bonds offering interest plus price appreciation

Physical gold: Jewelry, coins, and bars

What Should Investors Do?

Past gains have been impressive, but gold prices are influenced by global factors such as international demand, currency movements, and geopolitical events. Both physical gold and ETFs have their place—physical gold for cultural reasons, ETFs for convenience and security. The right choice depends on individual goals, investment horizon, and risk appetite.

Disclaimer: This article is for informational purposes only and should not be treated as financial advice. Please consult a professional advisor before investing. Past performance is not a guarantee of future results.