Karwa Chauth to Diwali: Can digital gold on UPI apps turn festive gold buying into a mainstream investment?

As India enters the festive season, with Karwa Chauth and Diwali traditionally driving gold purchases, digital platforms could offer consumers another way to invest in the yellow metal. Payment apps and online platforms have made it possible to buy gold in small amounts, without visiting a jewellery store. However, building investor confidence and ensuring transparent pricing will be crucial to turning this convenience into sustained demand.

According to the World Gold Council’s (WGC) report, Digital Gold: Unlocking a $700-Billion Opportunity, more than 120 million customers in India have engaged in digital gold transactions. Platforms such as Paytm, PhonePe and Google Pay have helped expand access by allowing consumers to purchase gold through familiar digital channels.

Festive demand meets digital convenience

Gold purchases during Karwa Chauth and Diwali are closely associated with tradition, gifting and auspicious buying. While jewellery remains an important part of these occasions, digital gold offers an alternative for consumers who want exposure to gold without committing to the cost of a physical coin, bar or ornament.

The ability to buy fractional quantities also lowers the entry barrier for younger consumers and those with smaller investible surpluses. Rather than saving for a larger purchase, consumers can accumulate gold through multiple small transactions.

However, whether this translates into a meaningful shift in festive spending remains to be seen. The WGC report highlights the potential of digital distribution but does not establish how much festive gold demand is moving from physical purchases to digital products.

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Familiar apps can widen the investor base

The report identifies distribution through mainstream financial platforms as a key driver of adoption. In markets where digital gold is available through payment platforms, banking apps and super-apps, penetration is up to seven times higher than in markets without such channels.

India’s experience illustrates how integrating gold purchases into platforms that consumers already use can simplify access. Yet convenience alone does not guarantee that users understand the product, its costs or the conditions under which their holdings can be redeemed.

The opportunity could also extend beyond existing gold buyers. The WGC estimates that around 65% of potential latent demand for digital gold could come from people who have not previously invested in the metal. This suggests digital platforms could bring new participants into the gold market rather than merely redirect existing purchases.

Trust remains the biggest hurdle

Despite strong interest, digital gold remains a relatively small market. The WGC estimates its global value at $45–55 billion, compared with approximately $13 trillion for the physical investment gold market.

The report identifies trust, access, product utility and pricing as the four principal barriers to wider adoption. Nearly four in five investors prioritise trust in the provider, while 33% said better proof and transparency of physical gold backing would encourage adoption.

Clear redemption mechanisms, credible custody arrangements, consumer protection and competitive fees will therefore matter as much as the ease of buying gold through an app.

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Can digital gold become a mainstream investment?

The WGC projects the digital gold market could reach $160–170 billion by 2031 in its base-case scenario, assuming annual growth of around 27%.

The festive season may provide a useful opportunity for platforms to introduce consumers to digital gold. But lasting growth will depend on whether these first purchases translate into repeat investments, supported by transparency, investor confidence and clear product safeguards. The challenge for payment apps is not simply to make gold easier to buy, but to make digital gold a trusted part of household investing.