Gold Exchange Traded Funds (ETF) Complete Guide

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  • 20 Apr 2023

Are you thinking of buying gold as an investment? However, you are worried about how to keep the gold safe and where to buy to get the genuine gold, isn’t it? So, you do not need to purchase physical gold to invest in it as there is a Gold ETF (exchange-traded fund).

In this article, you will learn what a Gold ETF is and how you can invest in it, and other details.

A Gold ETF is an exchange-traded fund that exclusively invests in gold. Like all other ETFs, these gold ETFs are traded on stock exchanges just like shares. However, these are funds consisting of different assets, and here in the case of gold, it comprises gold derivative contracts.

A Gold ETF consists of futures or options contracts, with the underlying asset being gold. Though you won’t be owning any physical gold by buying these gold ETFs, you can profit from the price fluctuation of physical gold in the market, as the price of gold ETFs ultimately depends on the price of physical gold.

As you may know, Gold significantly helps hedge financial risks in a volatile market. It is a saviour for investors when the market crashes. Gold ETFs can be used to hedge financial risks, economic and geopolitical fallout, and even against forex risks.

Gold ETFs can also be used to hedge against the volatility in the physical gold market. If the market price of gold rises and affects an investor, having Gold ETFs can reduce the risk to some extent. On the other hand, one can benefit from the falling gold market by trading an inverse Gold ETF.

The takeaway is that over extended periods of crude price fluctuations, stocks do not take a different path since there are many other influences on the stocks. On the other hand, when we look at a shorter period of time, the inverse relationship is much stronger.

Broadly speaking, oil prices does not have much impact on the markets, but they do have on the individual stocks and economy as a whole. As we have been witnessing in the current times…

There are certain things you need to be aware of while investing in Gold ETFs-

  • Gold ETFs can be more profitable than other investment vehicles with the underlying asset as gold, especially when you regularly invest a large amount of trade Gold ETFs.

  • Since these are funds, there are fund managers as well. If you pick a Gold ETF just because the fund has a lower expense ratio or the fund manager's fee is low, you may be in trouble.

  • Investing in Gold ETFs can prove beneficial for the short or medium term.


Investing in Gold is nothing new in India, but investing in Gold ETFs is becoming popular with time and evolving technology. Gold ETFs can be a great option if you want to invest in this yellow metal without physically holding it.

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