Investment in gold is experiencing a transformation, as an increasing number of consumers are choosing digital gold, despite the rising prices of the yellow metal. The volume of digital gold purchases via UPI experienced a remarkable increase of 377% over a span of 16 months, reaching 99.77 million transactions in August, compared to 20.92 million transactions recorded in April 2024, according to data. The value of gold purchases experienced a significant increase, more than doubling during this period to ₹1,184 crore last month, up from ₹550 crore in April 2024.
The surge, as noted by analysts, is propelled by anticipations of an additional increase in gold prices alongside the ease of purchasing it through digital means. The price of 24 karat gold per gram increased approximately 44% year-on-year, reaching ₹11,021, in contrast to ₹7,633 during the same period last year. The increase in gold prices has contributed to a surge in purchasing value, while the growth in volume was driven by expectations of further increases in the price of the yellow metal, stated Saumil Gandhi. “The ease of purchasing gold online is also having an impact. Consumers can opt for a small unit to fit to their budget when purchased digitally, making this form a popular choice,” he said.
Service providers such as PayTM, Google Pay, and PhonePe facilitate consumer purchases of digital gold, which is predominantly offered by companies like MMTC PAMP and Augmont Goldtech. Jewellers such as Tanishq and Senco provide digital gold options. Investment in digital gold is conducted in certified 24 carat. The gold resides in the custodian’s vaults, secured against the digital certificates that have been issued to the purchasers. The certificates may be redeemed either as cash or consumers have the option to visit designated shops to obtain gold in physical form. Digital gold has experienced one of the most significant growth metrics, both in terms of volume and value, compared to various other leading product categories for UPI transactions. The latest data indicates that UPI channels are predominantly utilized for grocery purchases, with a monthly transaction volume reaching ₹68,116 crore.
The acquisition of digital gold first secured a position among the top 10 medium transacting categories in April of the previous year. Since that time, it has exhibited a consistent upward trajectory. A structural shift is occurring in consumer purchasing behavior today, as noted by India’s chief economic advisor V Anantha Nageswaran in Kolkata last week. Such purchases are expected to increase as consumers will experience an uptick in disposable income due to the GST rate reductions in addition to the income tax cuts, he stated.