As India enters its peak festive and wedding season, traditionally the biggest period for gold consumption, consumer buying habits are shifting. While high and volatile gold prices are limiting casual purchases, demand for gold as an investment asset remains strong. Notably, tech-driven "digital gold" has seen massive growth, despite severe warnings from financial regulators.
Traditional Buying Meets a New Investment Trend
The season is exposing a clear divide between how Indian households have historically bought gold and how newer investors are approaching it:
Traditional behaviour: Indian households traditionally buy physical gold, jewellery and coins, during festivals and weddings as an auspicious asset
Emerging trend: Investors are increasingly adopting digital gold due to its convenience and lower entry barriers
Growth data: Digital gold purchases reached approximately ₹2,500 crore (~1.6 tonnes) per month between June and August 2026, marking a 110% year-on-year increase compared to August 2025
Investors are also increasingly shifting toward regulated paper gold options, driving a pickup in gold futures and gold ETF participation, Indian gold ETF inflows surged 67% month-on-month in August to ₹2,597 crore, with total holdings rising by 1.6 tonnes to reach 121.3 tonnes
On the MCX, average daily turnover jumped 38% month-on-month to ₹2,950 crore, its highest level in five months, while average daily trading volume rose 27% to 19 tonnes
Why Prices Are Volatile - and Where the Risks Lie
Gold prices have experienced significant volatility this year, driven by global macroeconomic factors such as rising crude oil prices, inflation fears, and policy signals from central banks. Even as digital gold's popularity grows, the product continues to sit outside formal financial regulation, exposing buyers to risks that regulated instruments do not carry — a concern regulators have flagged repeatedly as unregulated platforms market digital gold as an easy, app-based alternative to physical bullion.