Devaan Salame, a retired army officer, always believed in the lasting value of physical gold. He often shared stories about how gold had helped their family during tough times. He boasted about his gold investments to his family when he got the news that gold touched the all-time high milestone of USD 3,128 globally.

For his daughter, Bhawana, Mr Salame plans to gift her some gold jewellery on her 31st birthday. When he tells Bhawana about his plan, she shares a different view, she suggests, Papa, instead of buying the physical gold, could we consider investing in gold mutual funds? They offer the same returns as gold without the worries of storing and securing the physical gold or jewellery.

Mr. Salame gets curious and asks, “How do these gold mutual funds work?” Are they safe? Bhawna explains that gold mutual funds mirror the performance of the gold prices, and they are secure and convenient to sell.

Mr Salame agreed to this smart investing idea and gifted Bhawna the gold mutual funds and wished that her daughter and gold may touch new and new highs!

What’s Fueling Gold’s Record-Breaking Rally?

The yellow metal which is also known as ‘safe haven’ touched its all-time high of $3,128.06 per ounce as investors sought haven investments amid US tariffs’ worries. Whenever there is uncertainty in the market, investors withdraw from riskier assets like stock which leads to a weak US dollar.

As the trade related anxieties shadow due to aggressive US policies, the possibility of US recession also increases the demand for gold. Further, the need for interest rate cuts weakens the dollar making the precious metal, gold, more expensive in dollar terms.

Domestically, the financial year 2024-25 also proved to be a golden year for the yellow metal. The gold prices increased 32% against the 5% returns of Nifty 50 in FY 24-25. The gold which was traded at around Rs 67,000 per 10 grams on 28 March 2024, closed at Rs 88,850 per 10 grams on 28 March 2025.

Let’s Find a Best Way to Mint Higher Gold Returns

• Jewellery - Investing in gold and gifting jewellery on traditional occasions are two different things. Jewellery comes with heavy “making charges along with 3% GST” which increase the buying price and affects the gold returns when you sell it. However, people nowadays also prefer to gift gold in digital forms or mutual funds the way Mr Salame did so that her daughter could enjoy higher returns.
• Digital Gold - This is a better way to buy gold at the ongoing market price. Digital gold also eliminates the burden of safely securing and storing the gold and you can buy this with a minimum amount of as low as Rs 100. Digital gold is a best way to accumulate gold with low investments, however this also attracts the 3% GST.
• Sovereign Gold Bonds (SGBs) - SGBs are the best way to optimise gold returns as the government also offers additional 2.5% interest rate along with the increase in the gold value. SGBs do not attract any GST or capital gains tax except tax on interest paid. However, SGBs demand a maturity period of 8 years. Notably, considering the increase in the gold prices, the government has not issued SGBs since February 2024.
• Gold Saving Schemes - Apart from the government, jewellery retailers also provide gold saving plans to facilitate SIPs in gold jewellery. For example, the Tanishq golden harvest scheme offers customers to contribute a fixed amount starting from Rs 2,000. Upon maturity, the accumulated sum can be used to buy jewellery from Tanishq. We believe that by now you must have understood the problem with this scheme.
• Gold Mutual Funds or ETFs - These instruments are the perfect mix of the options mentioned above. Gold mutual funds and Gold exchange traded funds (ETFs) provide the same returns as gold, are easy to secure and store, easy to sell and do not attract any GST. Having Gold mutual funds or ETFs in your portfolio also helps you to diversify and saves you from the market volatility.

There are a few slight differences between Gold mutual funds and Gold exchange traded funds (ETFs), the former is professionally managed while the latter is passively managed. Also, Gold mutual funds do not require demat accounts and you can start investing with SIPs. 

Taxes

We know taxes are the worst part when you talk about investment returns and nobody can’t help it, but it is what it is. Apart from 3% GST on selected gold instruments, Gold attracts short-term capital gains tax (STCG) depending on the tax slab. While the long-term capital gains tax (LTCG) is 12.5%.

Please note that the long-term for ETFs is considered at 1 year, while its 2 years for the Gold mutual funds.

MINTIT, India’s only dedicated Mutual Fund Platform which caters to your personalised goals and accompanies you to achieve your financial milestones is eager to help you build your wealth. Depending on your profile it precisely suggests tailored investing plans to achieve your goals.

Whether it is to buy Gold, plan for a Wedding, Retirement, Car or Home, let MINTIT and you set the goal and achieve it. MINTIT helps you to invest in the Gold Mutual Funds while analysing your goals, risk capability, tenure etc.

Happy Investing!