Summary of this article
Digital gold purchases surged to Rs 2,590 crore recently.
Sebi warned investors against this entirely unregulated asset class.
Buyers prefer digital gold for its low minimum investment.
India is in the middle of the festive season and is gearing up for the upcoming wedding season as well. Typically, the demand for gold tends to peak during these seasons, and something similar can be seen in 2026 as well.
According to the World Gold Council's India gold market update, investors and consumers are increasingly turning to digital avenues to secure their gold purchases. This can be seen in the way digital gold purchases have increased. However, the surge in digital gold buying comes at a time when regulatory authorities are tightening their grip.
Notably, the demand has risen despite the Securities and Exchange Board of India (Sebi) warning investors against investing in digital gold due to the asset class being outside its regulatory supervision.
The Appeal Driving the Digital Gold Rush
Purchases of digital gold remained firm throughout September, climbing to Rs 2,590 crore. The World Gold Council report notes that the figure marks a 4 per cent increase from August and a staggering 83 per cent jump compared to the same time a year earlier, indicating that the sales of digital gold have risen despite Sebi’s warning.
One of the potential reasons for the surge in digital gold’s popularity is the ease with which it can be bought and sold. Thus, investors are drawn to it as it requires an extremely low minimum investment, often starting from just Re 1.
Additionally, it also offers similar advantages to other paper gold options, such as removing the hassle of physical storage, purity concerns, and locker charges.
The report also showed that in terms of volume, digital gold transactions reached 1.7 tonnes during the month. This volume sits 18 per cent higher than the long-term monthly average recorded since January 2025.
Looking at the broader picture, year-to-date digital gold purchases have reached 16.3 tonnes, which is a 76 per cent growth from the 9.2 tonnes recorded in the corresponding period of 2025.
Regulatory Checks and Sebi’s Caution
While digital gold purchases climb, traditional gold investment routes are facing fresh challenges. Mutual funds investing in gold ETFs announced a temporary suspension of fresh and additional subscriptions into gold savings and Fund of Funds earlier in October.
The restriction came into effect on October 16, 2026. The suspension followed discussions with the Securities and Exchange Board of India and the Reserve Bank of India’s efforts to reduce gold imports.
Additionally, the market regulator has raised red flags regarding unregulated digital gold platforms. Sebi first cautioned investors on November 8, 2025, that dealing in digital gold on certain online apps carries significant risks because these products fall completely outside of its regulatory net.
"Digital gold products are neither notified as securities nor regulated as commodity derivatives. Investors in digital gold are not protected by SEBI's investor protection mechanisms," Sebi said.
This means if a platform defaults, changes its terms, or faces technical issues, buyers do not have the safety net of Sebi’s grievance redressal systems like SCORES, leaving them entirely dependent on standard consumer courts and the private company's terms of service.
Broader Festive Outlook
Even with the new restrictions in place, the impact on overall investment flows is expected to be modest. Notably, the recent mutual fund suspension does not apply to existing systematic investment plans or redemption requests; direct investments in gold ETFs can continue without interruption.
The ongoing festive and wedding season can provide a favourable near-term backdrop for gold demand. With the festive rush in full swing, retail buyers should keep a few critical guidelines in mind to protect their wealth while buying gold. They should only look at Sebi-regulated options like Gold ETFs or Sovereign Gold Bonds, which offer structural safety and, transparency, to increase their portfolio exposure to gold and avoid unregulated assets. Additionally, buyers should not fall for online offers of fixed or guaranteed returns on digital gold.
