This Diwali can be the best time to buy gold. Gold prices usually rise during the festive season, but this year there is good news for investors. Gold prices have fallen by around 12 percent in the last six months and are expected to rise sharply in the next few months.
Due to this stability in gold prices, investors are increasingly attracted to gold exchange traded funds (ETFs). According to the data, total assets under management (AUM) in gold ETFs have increased every month. It increased from ₹1,58,400 crore in April to ₹1,91,000 crore in October this year. There has been a net investment of around ₹ 3,300 crore in gold ETFs in October.
What is a Gold ETF?
A gold ETF is an open-ended mutual fund scheme listed on a stock exchange, which tracks the local price of physical gold. In this, one unit is usually equal to 1 gram of 99.5% pure physical gold. Investing in ETFs to buy gold has many advantages. The World Gold Council, in its new quarterly forecast, said that demand for gold is expected to increase due to the current festive and wedding season. Additionally, gold prices are likely to rise significantly over the next 12 months as central banks continue to add gold to their gold reserves at a historically rapid pace.
Better than market returns
Gold ETFs have outperformed the market over the past 12 months. Nippon India Gold ETF BeEs’ tops the list with a return of 12.58%. ‘Invesco Gold ETF’ and ‘ICICI Gold ETF’ have returned 12.50% and 12.39% respectively in one year. Tata’s Gold ETF has returned 12.62% and Quantum’s Gold ETF has returned 12.81% over the same period. Since the last Diwali celebrated on October 20, 2025, the gold ETF has returned an average of 9.22%. A total of 22 gold ETFs existed during this period.
Why is it a profitable deal?
While buying coins or jewelry is an important part of our culture, gold ETFs offer many practical and financial benefits. Indians have traditionally bought gold ornaments and coins, but now they are realizing that buying physical gold is very expensive as there is a ‘making charge’ which adds about 15% to its price. Gold ETFs have no making charges.
No fear of theft, no locker costs
There is no risk of theft in ETFs and you don’t even have to pay for bank lockers, as they are stored in your demat account completely safely. In the case of physical gold, when investors sell it, expenses such as deductions and assay fees are often incurred. While gold ETFs can be easily bought or sold at transparent and live prices during market hours on NSE and BSE. Another major advantage of gold ETFs is that while buying physical gold requires large sums of money, you can invest in gold ETFs in very small amounts – like one gram of gold, or start with just a few rupees through a Systematic Investment Plan (SIP).
This way I got quick payback
As of October 26, 2026, the gold ETF or fund category has returned 6.94% year-to-date, 18.64% in one year, 31.90% in three years and 23.15% in five years, according to Value Research data. Pankaj Mathpal, founder and CEO of Optima Money, said the outlook for gold remains positive, as there is strong investment demand and a slight reduction in total supply is expected.
Fluctuations in gold prices
However, higher interest rates, bond yields and the strength of the US dollar may cause some volatility in gold prices. From an investor’s perspective, this is not the time to chase gold prices or invest large sums. Investors may consider accumulating small amounts of gold through gold ETFs depending on their current portfolio allocation, amount of investment in gold and their long-term financial goals. Gold should be seen primarily as a portfolio diversification and hedge against uncertainty, not as a means of short-term speculation.
