Are you considering investing in gold? Investing in Gold Exchange Traded Fund (Gold ETF) can be a smart option. Gold exchange-traded funds have given returns of up to 19% in the last one year. ETFs linked to gold prices provide investors a way to invest in gold. 1 unit of Gold ETF is equal to 1 gram of pure gold. It can be bought and sold just like stocks on the stock market (BSE and NSE). It does not contain any actual physical gold, but the investor gets funds based on the current price of gold.

Gold price fluctuations

During the festive season, gold had reached its highest price of Rs 81,330 per 10 grams on October 31. However, now it has come down from this point to Rs 77,070. A few days ago, its prices had fallen by up to Rs 5000. Experts predict that the demand for gold ETFs will increase when interest rates in the US and UK come down. The price of gold is expected to reach Rs 85,000 by June 2024 and Rs 1.68 lakh per 10 grams by 2030.

Gold ETFs allow the purchase of units equivalent to 1 gram of gold. Investing in small amounts through SIPs is simple. Generally, gold is sold in quantities of at least 10 grams. Gold exchange-traded funds are structured according to the guidelines set by the London Bullion Market Association. The purity is guaranteed at 99.5%.

The purity and price of physical gold can vary. Gold exchange-traded funds (ETFs) also have a brokerage fee of around 1% and an annual portfolio fee. However, when buying physical gold, you will have to pay a making charge of 8-30% to both jewellers and banks. Gold ETFs or electronic gold held in your dematerialised account are safe, so there are no worries of theft.

There is an additional cost to safeguard physical gold. Gold ETFs can be bought and sold instantly as they have high liquidity. It can also serve as collateral for a loan.

How to invest in Gold ETFs?

You will have to open a demat account with a brokerage company. Once signed in, you will have the opportunity to buy units of gold ETFs on NSE or BSE. The amount invested will be withdrawn from your bank account. In your demat account, the ETF units will appear two days after ordering. You have the facility to sell gold ETFs at any time. Experts believe that buying gold ETFs during a period of falling gold prices can be a lucrative investment in the long run.