Diwali 2026: Buying gold this Dhanteras? What buyers should know before going to their nearest jeweller

For many Indians, buying gold on Dhanteras carries emotional and traditional significance. But with prices elevated and investment choices expanding, buyers are increasingly weighing sentiment against costs, risks, liquidity and financial goals.

Gold has outperformed equities over the past decade, although returns across different holding periods underline the importance of entry timing, portfolio allocation and the choice of investment instrument. Commodity analysts say investors must look beyond recent rallies when deciding how much gold to hold.

Gold outperforms Sensex, Nifty over 10 years

MCX gold gained about 353 per cent over 10 years, translating into a compound annual growth rate of 16.3 per cent. In comparison, the Sensex and Nifty 50 rose roughly 178 per cent each, delivering annualised returns of about 10.8 per cent, excluding dividends of around 1.3 per cent.

While the yellow metal delivered stronger returns over the longer period, analysts say its performance across different holding periods shows that the timing of an investment can influence returns. Investors must also consider the proportion of gold in their portfolios and whether they choose physical gold, digital gold or exchange-traded funds.

India's gold demand rises sequentially as prices surge 

According to the World Gold Council's Gold Demand Trends: India Focus Q3 2026 report, India's gold demand rose 24 per cent quarter-on-quarter to about 162 tonnes during July-September. However, volumes declined 29 per cent from a year earlier.

Domestic gold prices averaged Rs 1,48,891 per 10 grams, up 45 per cent year-on-year. Jewellery demand increased 33 per cent sequentially to nearly 100 tonnes, while demand for gold ETFs rose to 5.3 tonnes from 3.6 tonnes in the previous quarter.

What buyers should consider

Buyers should first determine whether the gold is meant for wearing, gifting, saving or long-term investment. Jewellery and coins may suit traditional purchases, while gold ETFs may be more appropriate for investors seeking exposure to gold prices without owning physical gold.

• Compare making charges and investment costs: Jewellery buyers should account for making charges, wastage charges and goods and services tax, which increase the overall purchase cost. Digital gold platforms may impose buy-sell spreads and other charges, while gold ETFs involve expense ratios and potentially brokerage fees. Comparing these expenses is important because they can significantly affect investment returns.
• Check gold purity and storage arrangements: Consumers buying jewellery or coins should check Bureau of Indian Standards hallmarking, purity certification and the Hallmark Unique Identification number wherever applicable. Digital gold investors should examine how the underlying physical gold is stored, whether independent audits are conducted and what happens if the platform faces financial difficulties. Gold ETFs operate under the Securities and Exchange Board of India's mutual fund regulatory framework.
• Understand the risks of digital gold: Digital gold allows investors to buy fractional quantities through online platforms without a demat account. According to the World Gold Council, gross digital gold purchases increased 76 per cent to 16.3 tonnes during January-September 2026, compared with 9.2 tonnes in the corresponding period a year earlier. However, digital gold does not operate under a dedicated SEBI regulatory framework. Experts suggest checking the provider's credibility, custody arrangements and redemption conditions before investing.
• Review liquidity and redemption rules: Physical gold can generally be sold or exchanged, although jewellers may make deductions depending on their buyback policies. The liquidity of digital gold depends on the platform's terms, while gold ETFs can be traded on stock exchanges during market hours. Investors should assess transaction costs, redemption timelines and potential restrictions before selecting an investment option.
• Consider taxation before investing: The tax treatment of physical gold, digital gold and ETFs varies. Jewellery and digital gold purchases generally attract GST, while capital gains taxation depends on the investment format and holding period. Investors should compare post-tax returns instead of focusing only on price appreciation.
• Match gold purchases with financial goals: The World Gold Council's consumer survey found that 77 per cent of respondents were considering lower-purity jewellery, while 76 per cent were considering exchanging old gold to finance new purchases.
• The survey also found that 39 per cent intended to restrict purchases to festivals, auspicious occasions or promotional offers, reflecting greater sensitivity to prices. Experts said investors should not make decisions solely on festive sentiment or short-term price movements.

For long-term portfolio diversification, regulated gold ETFs may offer a suitable investment route. Jewellery remains relevant for personal use and gifting, while digital gold offers convenience for small-ticket purchases.

Gold's 10-year performance has exceeded that of the Sensex and Nifty 50, but buyers should consider affordability, costs, taxation, liquidity, investment objectives and entry timing before deciding how much gold to purchase and which instrument to use.