Gold has currently become a favorite place to invest due to global uncertainty, Donald Trump’s tariff threats and sluggishness in the global economy. There has also been a lot of inclination over jewelery in the social circulation of India. Gold is also considered a means of rescue against safe assets as well as protection against inflation risk.
However, with the changing times, people are now shifting to financial gold instead of physical gold and jewelery. India’s gold jewelery demand has steadily declined in recent years. According to the World Gold Council, according to an estimate, India’s Gold Jewelery Dimang stood at 563 tonnes in 2024, while in 2022 the figure was 600 tonnes i.e. it declined by 7 %. Also, this demand was 610 tonnes in 2021 and 575 tonnes in 2023.
Why is there a decline in demand for gold jewelery?
The demand for gold in India is steadily increasing and in such a situation, buying jewelery is becoming expensive. Also, the additional making charge on jewelery is 10–12 %, which does not return at the time of the sale of jewelery. The young investor is not attracted to the use of jewelery as a property. His interest is now a digital format of gold assets, now known as financial gold.
There are financial fund investments instruments, which are connected to gold in the form of mutual funds or exchange trended funds (ETFs).
Tremendous boom in Gold ETFs
Gold ETFs are becoming a popular option for investment in India. According to data from the Association of Mutual Fund in India, the Net Inflow of Gold ETF in 2024 was Rs 9,225 crore with a jump of 216 %. In the last year i.e. in 2023, this figure was quite low at Rs 2,919 crore. Gold ETF monitors the prices of physical gold. It can be purchased or sold through stock exchange like shares. Also, investors do not have to pay any kind of making charge on it.
Long -term capital gains tax on Gold ETF is also low
In the budget of 2024, Finance Minister Nirmala Sitharaman used to Allen that if the investment of Gold ETF is present for more than 12 months, then there will be 12.5 % long capital gains (LTCG) without indexation. Earlier, there was 20 % with long -term capital gains tax indexes on Gold ETF.