Gold Near Record Highs: Shift from Lockers to Demat Accounts

In August 2026 domestic gold prices surged 12% to ₹1,58,854 per 10 grams, closely mirroring a 13% rise in the global benchmark, which reached US$4,386 per ounce – one of the strongest monthly gains in nearly three decades. Despite the price rally, jewellery retail counters did not experience a commensurate sales spike; instead, investor money flowed into exchange‑traded and app‑based products.

Gold exchange‑traded funds (ETFs) recorded net inflows of ₹2,596.70 crore in August, up from ₹1,559 crore in July, marking the third straight month of positive flows. Total assets under management in Indian gold ETFs climbed to roughly ₹1.91 lakh crore, backed by 121.3 tonnes of physical metal. Year‑to‑date inflows into Indian gold ETFs amount to US$4.22 billion.

Digital gold purchases accelerated, averaging around ₹2,500 crore per month between June and August, with August buying up 110% year‑on‑year. On the futures side, average daily turnover of gold contracts on the MCX rose 38% month‑on‑month to about ₹29,500 crore, the highest level in five months.

Physical demand showed a sharp decline: gold imports fell to US$2.3 billion in August, a 45% drop from July and a 58% decline from a year earlier. The domestic price now trades below import parity, with the discount widening to US$78 per ounce as of 11 September, partly due to customers exchanging old jewellery for new pieces.

Commentary: Mr. DineshKumar Gurusamy, Founder & CEO of AETRAM Group of Companies, explained that jewellery incurs hidden costs such as making charges, GST, purity concerns and resale deductions, which erode returns. He highlighted that a gold ETF unit trades on NSE and BSE, resides in the same demat account as equities, can be bought in small quantities, offers transparent pricing and exchange‑grade liquidity, and serves as a portfolio stabiliser rather than a growth engine.

Cautionary signals: Only about 4,000 new gold ETF folios were opened in August, far below the average of roughly 330,000 per month recorded from January to July, bringing the total folios to 12.54 million. Existing investors are adding to positions, while new entrants appear hesitant. Wealth managers warned of recency bias, noting a similar rush after the January 2026 peak of about ₹1.75 lakh per 10 grams; prices have since eased, with domestic gold down 4.6% in September as of the 11th amid shifting US Federal Reserve expectations. Gold provides no dividend or interest, and returns depend solely on price movements, which can be both upward and downward.

Practical framework for investors:

  • Treat gold as a fixed‑percentage allocation within a diversified portfolio and rebalance periodically rather than timing market spikes.
  • Prefer regulated vehicles such as gold ETFs and gold mutual funds, which fall under SEBI oversight; digital gold sold through apps lacks such regulation, so investors should verify metal custody and redemption mechanisms.
  • Use systematic purchase plans to smooth price volatility.
  • Separate consumption (e.g., jewellery for weddings) from investment purposes, employing distinct instruments for each.

Outlook: The World Gold Council projects demand to improve during the festive and wedding season, though high prices and volatility may temper discretionary buying. Global drivers—including US interest rates, the US dollar, and central‑bank purchases—will continue influencing prices, while the rupee adds an additional variable for Indian investors. The overall trajectory is clear: gold is migrating steadily from physical lockers to demat accounts, and investors who treat it as a hedge rather than a speculative bet are positioned to benefit.

About Aetram Trades: Aetram Trades Private Limited, headquartered in Chennai, is a brokerage firm offering trading and investment services across Indian financial markets. It is SEBI‑registered (Reg. No. INZ000309838), a SEBI‑registered research analyst (Reg. No. INH000024222), and a member of NSE (90356), BSE (6832) and MCX (57110). The firm is also registered with AMFI (ARN‑281894). Disclaimer: Investments are subject to market risks; brokerage charges are subject to change as per the schedule on the company website; currency derivatives are permitted for hedging only, per prevailing regulatory guidelines.