Why gold has become a strategic asset for Indian investors

In recent years, gold has transitioned from a cherished family heirloom in Indian households to a strategic financial asset for investors. While the reverence for gold in bridal sets and festival gifts remains strong, a significant shift is occurring in how Indians view and utilize this precious metal. Investment demand for gold has surpassed jewellery consumption for the first time, with the June quarter demand remaining above its long-term average since 2000.

Younger Indians are at the forefront of this change, with demand for gold jewellery declining by 21% in FY2026, while demand for bars and coins surged by about 22%. This generation is exchanging inherited ornaments to fund homes, education, and businesses, or investing in financial products. Digital gold, including ETFs, is gaining popularity, with Indian gold ETF holdings nearly doubling from 40 tonnes in early 2024 to 98 tonnes by early 2026.

Around 14 crore Indians now use digital gold, with an average ticket size of just ₹100, allowing first-time savers to begin investing small and build gradually.

The transition to 'paper' gold is driven by geopolitical concerns, making gold an attractive option as an inflation hedge and a diversifier that doesn't depend on any single economy. Sociologists observe that this shift is partly due to young Indians gravitating towards digital gold, reflecting a broader trend of financialization of gold holdings among the younger demographic.

The Government of India is considering requiring digital gold to be backed by physical bullion, with joint oversight by the Reserve Bank of India and SEBI, signaling increasing confidence in this evolving asset class.