Diwali Special Guide: Digital Gold Vs Physical Gold—What's The Better Investment This Festive Season?

Gold prices held steady below the key $4,000 per ounce level (over Rs 12,200 per 10 grams of 24-karat) on Friday, remaining on track for their eighth straight weekly gain. With the festive season in India, the sharp and continuous rise in gold prices has created a buzz among consumers.

Diwali is traditionally seen as an auspicious time to purchase gold. Though, this year’s steep rally, with gold delivering returns of over 50%, has dampened buying sentiment. On Friday, 24-karat gold was priced at Rs 12,273 per 10 grams on the Tanishq website.

Gold prices have risen 2.2% this week. On Wednesday, bullion reached a record high of $4,059.05, Reuters reported. Overall, gold has surged nearly 52% in 2025, driven by strong demand, geopolitical uncertainty and economic growth concerns.

Gold is seen as a safe bet during global instability. The ongoing renewed expectations of US rate cuts, tariff-related concerns are among factors pushing investors toward gold.

At a time like this, consumers planning to buy gold in the near term can consider either digital or physical gold, depending on their needs, budget and investment goals.

Both categories offer unique advantages. Physical gold provides a tangible asset and is preferred for ceremonial purposes. Meanwhile, digital gold offers convenience and easy storage.

Digital gold allows users to buy, sell and store gold online. It can be purchased in small amounts, starting from as little as Re 1. The gold is securely stored by the service provider. Many jewellery brands and investment platforms offer this option.

It provides easy liquidity and can be sold anytime. There is no need for physical storage or safety worries, giving the consumers peace of mind over theft and maintenance related concerns.

In this scheme, the buyer is offered 24-karat pure gold, priced in real-time. It is considered suitable for both short-term and long-term investment goals. It is taxed in the same mechanism as physical gold and has a holding period of 12 months. This means the digital gold sold within 12 months of purchase are considered as short term capital gains and taxed at income tax slab rates. Digital gold held for 12 months or more is taxed at 12.5% on gains.

There are many ways to purchase digital golds including through mobile wallets, banking apps, and jeweller websites. Another popular way to invest in digital gold is through Gold ETFs (Exchange Traded Funds).

Like physical gold, digital gold also attracts 3% goods and services tax (GST) while purchasing.

Physical gold is a traditional and tangible form of investment. It includes gold coins, bars and jewellery. It is widely accepted for personal or ceremonial purposes such as weddings.

Physical gold can be stored at home or in bank lockers. It offers emotional and cultural value. While purchasing physical gold, a 3% GST is levied. If someone is buying jewellery, buyers may also pay making charges, which typically range from 10% to 20%.

These additional costs make physical gold more expensive compared to digital gold. This means that when buying gold jewellery, one is typically paying a higher amount than the value of the gold. Hence, it may not be an ideal option for short-term investment.