GUIDESINVESTMENTS
Gold ETF: How to Invest, Buy, and Choose the Best One
3 MIN • 
LAST EDITED BY ANKANA GHOSHAL ON OCTOBER 9, 2025.
LAST EDITED BY ANKANA GHOSHAL ON OCTOBER 9, 2025.
GUIDES LAST EDITED BY ANKANA GHOSHAL ON OCTOBER 9, 2025.
Imagine being the owner of gold without having to handle it, store it, or be concerned about its purity. This strategy is made feasible by gold exchange-traded funds (ETFs), which provide exposure to gold. However, what function do these financial tools serve, and how might they fit into investment plans?
Gold ETF (Exchange Traded Fund) is a mutual fund that tracks gold prices by holding physical gold. Each ETF unit represents a specific quantity of gold, typically 1 gram. When you buy Gold ETF units, you're essentially buying gold indirectly.
Like individual stocks, gold exchange-traded funds (ETFs) are traded on stock exchanges. During market hours, you can purchase and sell them at the going rates. The fund house buys actual gold worth the sum of investor funds and keeps it in safe deposit boxes.
In India, HDFC Gold ETF, ICICI Prudential Gold ETF, SBI Gold ETF, and Kotak Gold ETF are the main gold exchange-traded funds. Each has a low tracking error and keeps a close eye on gold prices.
How Gold ETF works involves a sophisticated but transparent mechanism:
How to invest in gold etf requires a simple setup:
Step 1: Open a demat account with any registered broker (Zerodha, Groww, HDFC Securities, etc.).
Step 2: Fund your trading account through net banking or UPI.
Step 3: Research available Gold ETFs, compare expense ratios, tracking errors, and fund house reputation.
Step 4: Place buy orders through your trading platform during market hours (9:15 AM to 3:30 PM).
Step 5: Monitor your holdings through your demat account or broker app.
Step 6: Sell when needed by placing sell orders, just like selling stocks.
Minimum investment varies by ETF price, typically around ₹100-500 for one unit.
Understanding gold ETF options depends on several factors:
Comparison Criteria:
Understanding gold etf investment characteristics reveals both advantages and limitations:
Gold ETFs serve as a link between contemporary portfolio management and conventional gold investing. They preserve the potential portfolio benefits of gold while removing the inconveniences associated with physical gold.
For investors looking for gold exposure without the hassle of storage, gold exchange-traded funds (ETFs) might be a good option. They can be especially helpful for systematic gold investment plans that invest set sums of money every month or every three months.
Retail investors can invest in gold professionally with gold exchange-traded funds (ETFs). To learn the mechanism, investors may begin with modest sums and then modify allocations in accordance with their portfolio strategy and risk tolerance.
Instead of being stand-alone growth investments, gold exchange-traded funds (ETFs) can be viewed as tools for portfolio diversification. Although individual situations differ greatly, different financial advisors advise limiting gold allocation while keeping an eye on more general financial goals.
Disclaimer: This information is for educational purposes only. Please consult a qualified financial advisor before making investment decisions. Past performance does not guarantee future results. Gold investments carry market risks.
