Gold surge: ETFs rise, SGBs trade at premium, jewellery turns lighter

Manappuram, Muthoot shares fall up to 3.5% as gold falls below $4,000/ounce

This Dhanteras and Diwali, India’s enduring love for gold isn’t fading. It’s simply taking a new shape. Record-high prices have encouraged many buyers to move from heavy jewellery to smarter, paper-based options. Gold Exchange-Traded Funds (ETFs) are seeing record inflows, Sovereign Gold Bonds (SGBs) are trading at steep premiums due to limited supply, and digital gold is gaining popularity among investors.

Still, jewellery stores are far from quiet. They are adapting to the times with lighter, design-led, and diamond-studded collections that offer style without stretching budgets. India’s gold market is undergoing a quiet transformation where investment, innovation, and emotion now shine together.

This year, gold prices have risen more than 60 percent, emerging as one of the best asset classes. As of October 10, 2025, 24-carat gold in India is priced at Rs 12,085 per gram, while 22-carat stands at Rs 11,795. The 20-carat rate is Rs 10,755, 18-carat at Rs 9,788, and 14-carat at Rs 7,795 per gram, according to the India Bullion and Jewellers Association (IBJA). These are base rates and exclude GST.

Also Read: Gold hits new highs again: What is driving the rally and should you invest now?

ETFs spark a digital gold rush

Indian Gold Exchange-Traded Funds (ETFs) have turned heads globally this year. According to the World Gold Council (WGC), Indian gold ETFs clocked $902 million in net inflows in September 2025, a 285 percent jump over August. India ranked fourth globally, behind the US, the UK, and Switzerland, contributing significantly to the world’s $17.3 billion inflows.

ETFs are funds that invest directly in physical silver, and trade like equities on exchanges through demat accounts.

“During this festive season, flows into Indian Gold ETFs have accelerated, reflecting a preference for convenience, transparency, and liquidity amid high gold prices,” says Renisha Chainani, Head of Research at Augmont. Rising SIP participation shows that both retail and institutional investors now see ETFs as a transparent, paper-based way to own gold amid high prices and global uncertainty.

Association of Mutual Funds in India (AMFI) data echoes this enthusiasm. After small outflows in March and April 2025, inflows has surged sharply, peaking at Rs  8,363 crore in September against Rs 2,190 crore in August, registering a surge of 282 percent. The total AUM of gold ETFs now exceeds Rs 90,000 crore.

“The rally reflects a new comfort with digital investment channels,” Chainani adds. “ETFs are becoming a tactical tool for portfolio diversification, especially with rupee depreciation and volatile equities,” says Apurva Sheth, Head of Market Perspectives & Research, SAMCO Securities.

Even globally, Indian funds made a mark. Nippon India ETF Gold BeES topped all gold funds worldwide in September, with $279.7 million in inflows, surpassing US and European peers like iShares Gold Trust and WisdomTree Physical Gold.

SGBs: Scarcity commands premium 

If ETFs represent India’s new-age gold buying, the SGB market tells a story of scarcity and loyalty. Since the RBI discontinued new issuances after 2024, demand has shifted to the secondary market, where existing bonds are commanding sharp premiums.

“The discontinuation hasn’t dampened demand. It has made existing SGBs a prized asset,” says Col. Sanjeev Govila (retd), Certified Financial Planner and CEO of Hum Fauji Initiatives. “What’s interesting is that it’s not a lack of buyers but a shortage of sellers. Most investors are holding tight because of the 2.5 percent annual interest and tax-free redemption at maturity.

Similarly, prices for various SGB tranches are commanding significant premiums on the National Stock Exchange (NSE). For instance, the SGB June 2030 series, issued at Rs 5,091 per bond, last traded around Rs 14,300 on October 9. SGB Feb 2032 series in early September traded around Rs 12,597, with a turnover of Rs 3.2 crore, but by early October, prices breached Rs 16,700 and turnover jumped to Rs 6.9 crore.

“The festive rally has added momentum to secondary market trading,” says Govila. “Volumes remain modest because most investors are reluctant to part with their holdings as they see it as long-term wealth creation, not a trading instrument.”

He recommends that long-term investors focus on SGBs with maximum tenure remaining, as they benefit from both compounding interest and the full tax exemption. “Those who want quicker liquidity can look at shorter maturities, but they lose some of that post-tax edge,” he notes.

"Secondary market trading is limited, and investors looking to exit early often may face discounts to market value. With no fresh issuances expected, those looking for shorter-term or more flexible exposure to gold are increasingly turning to ETFs," says Sharwan Kumar Goyal Fund Manager and Head – Passive, Arbitrage and Quant strategies at UTI AMC.

Jewellery: Tradition bends, not breaks

Despite high prices, festive jewellery buying remains resilient. The difference lies in what consumers are choosing. “Jewellery stocks have shown mixed performance amid soaring gold prices. While revenue growth has been supported by higher realisations, volume growth remains subdued as consumers reduce purchase weights or delay big-ticket buys," says Chainani.  People are spending, but selectively  opting for lightweight, smaller pieces, or studded jewellery that blends aesthetics with value.

Titan Company’s domestic jewellery division grew 19 percent year-on-year, driven by Tanishq and CaratLane, both posting double-digit same-store growth. Studded collections across Tanishq, Mia, and Zoya saw mid-teen growth, while gold coin sales surged as investors sought bullion-backed value. Kalyan Jewellers, too, reported a 30 percent consolidated revenue growth in Q2FY26, supported by wedding and festive demand, with strong traction on its digital platform Candere.

Chainani points out, “Q2 business updates from leading jewellers like Titan, Kalyan, and Senco indicate moderate festive demand and strong traction in lightweight and studded jewellery segments. Margins are steady due to better product mix and inventory management. Investors are watching the festive quarter closely, as sustained high prices may cap volume recovery but support profitability through premium designs and brand-driven demand."

Sheth adds that the next quarter could see stronger momentum: “With Dhanteras, Diwali, and the wedding season aligning, we expect a pickup in both volumes and sentiment. The recent GST rate cut and improving consumer sentiment are likely to drive a recovery in volumes and revenue growth.”

The new gold equation

India’s festive gold story this year reveals a fascinating balance. Financial gold  in the form of ETFs and SGBs  is drawing in a new generation of investors seeking convenience, transparency, and returns. Yet, traditional gold -- like coins and the kind worn, gifted, and cherished -- continues to anchor cultural and emotional value.