What is the difference between Digital Gold and Physical Gold, which one is a profitable deal to buy?

Digital Desk- (Digital Gold) Rising gold prices in India during festivals, especially Diwali, have worried consumers. Diwali is an auspicious time to buy gold, but this year prices have risen sharply by more than 50%, dampening buying enthusiasm. On Friday, 24-carat gold was priced at ₹12,273 per 10 grams on Tanishq's website. 

Gold prices rose 2.2% this week, reaching a record high of $4,059.05 per ounce on Wednesday. According to Reuters, gold has risen about 52% so far in 2025. Strong demand, geopolitical uncertainty, and concerns about an economic slowdown are driving investors to consider it a safe-haven investment.

Gold has always been considered a safe investment during volatile times. Expectations of interest rate cuts in the US and concerns about tariffs are also attracting investors to gold. 

Consumers considering a near-term gold purchase can choose between digital and physical gold, depending on their needs, budget, and investment objectives.

Both have their own advantages. Physical gold is a tangible asset and is preferred for traditional or religious occasions. Digital gold, on the other hand, is convenient and can be stored securely online.

Digital Gold: Is it worth investing in ETFs?

Digital gold allows for online buying and selling and secure storage. You can start investing with just ₹1. The service provider securely stores your purchased gold. This feature is available at many jewelry brands and investment platforms.

It offers liquidity, meaning you can sell it at any time. There are no concerns about storage or theft, giving consumers peace of mind. This plan provides buyers with 24-carat pure gold, with a real-time price. It's suitable for both short-term and long-term investments.

Digital gold is taxed according to the same tax rules as physical gold. If sold within 12 months of purchase, it results in short-term capital gains and is taxed according to your income tax slab rate. If digital gold is held for 12 months or more, it results in long-term capital gains and the profit is taxed at 12.5%.

Digital gold can be purchased through mobile wallets, banking apps, or jewelry websites. It can also be invested in through gold ETFs. Like physical gold, digital gold also incurs a 3 percent GST.

Physical Gold: Is It Safe?

Physical gold is a traditional and tangible investment vehicle. It includes gold coins, biscuits, and jewelry. It is most commonly used for personal or religious occasions, such as weddings.

Physical gold can be stored at home or in a bank locker. It also holds sentimental and cultural value. A 3% GST is charged when purchasing physical gold. If someone buys jewelry, they also have to pay a making charge, which typically ranges from 10% to 20%.

These additional costs make physical gold more expensive than digital gold. This means that when you buy gold jewelry, you pay more than the actual value of the gold itself. Therefore, physical gold is not considered a profitable short-term investment.