Gold in 2026: Physical, ETF, or Nothing?
On 13 May 2026 the government raised gold import duty from 6% to 15% — the steepest hike on record. Here is what it actually did to the three ways you can own gold, using only official numbers.
13 May 2026. At midnight, import duty on gold went from 6% to 15%.
Not a Budget announcement. Four customs notifications — 15, 16, 17 and 18 of 2026 — signed the previous day. Ten percent basic customs duty, five percent Agriculture Infrastructure and Development Cess. The steepest single increase on record.
Two months later, gold sits at ₹1,41,159 per 10 grams. That is down about 10% from June, a six-month low, and still up roughly 6% for the calendar year.
So: is gold a buy, and if so, in what form?
This article is built differently from most. There is one control panel below. You set your numbers once. Every chart and every verdict on this page then recomputes off those numbers. Nothing here is a static example — it is your situation, run against official data.
Exhibit 1 — The duty hike did not do what you think
Here is the part almost everyone got wrong.
Duty went up 9 percentage points. Domestic physical gold prices rose 4–6%. The gap did not vanish — it showed up as a discount. Before the hike, Indian gold traded at roughly US$14 an ounce below landed cost. By 15 May, that discount had blown out to nearly US$150 an ounce. By mid-July it had narrowed to about US$40.
A discount that wide means one thing: the market refused to pay the duty. Importers ate it. Demand fell away rather than clear at the higher price.
Why this matters for your decision: the duty is baked into the domestic price of all gold — jewellery, coins, ETFs, everything. Gold ETFs hold domestic physical bullion. So the hike is not a reason to prefer one form over another. It is a reason to ask whether you want the asset at all, and to notice that you are currently buying at a price the domestic market itself is discounting.
There is a second-order effect, and the World Gold Council has measured it before. Across history, duty levels and unofficial imports carry a correlation of about 0.52. After the 2022 hike to 15%, smuggled volumes went from 17 tonnes a quarter to 50 tonnes. After the 2024 cut to 6%, they fell to near zero. We are now back at 15%.
If you buy unhallmarked gold from an unfamiliar counter over the next year, you should assume the discount you are being offered has a reason.
The control panel
Set these once. Everything below responds.
Exhibit 2 — How much gold you actually own on day one
You hand over your money. Some of it becomes gold. The rest becomes someone else's revenue.
The jewellery bar is the one that surprises people. Making charges are not a fee on top of your gold — they are a slice out of it. At 12% making, roughly a sixth of your money buys craftsmanship, and craftsmanship has no resale value at a bullion counter.
That is not an argument against jewellery. It is an argument against confusing jewellery with an investment. If you are buying something your daughter will wear at her wedding, the making charge is the point. If you are buying because you think gold is going up, you have just started 15% behind.
Exhibit 3 — What you keep after tax
Now run it forward. Same money, four routes, your holding period, your slab.
The tax rules diverged sharply after the 2024 and 2025 amendments, and the differences are larger than most people realise:
| Route | Long-term after | LTCG rate | Before that |
|---|---|---|---|
| Physical & digital gold | 24 months | 12.5% | Slab rate |
| Gold ETF | 12 months | 12.5% | Slab rate |
| Gold fund (fund-of-fund) | 24 months | 12.5% | Slab rate |
No indexation on any of them any more. And note the oddity: a gold ETF reaches long-term status in twelve months, but a gold fund that holds nothing except that same ETF needs twenty-four. Same underlying metal, double the wait.
Drag the holding period to 1 year and watch what happens. Only the ETF is long-term. Everything else is taxed at your slab, and at 30% that is a bigger hit than every making charge and expense ratio in this article combined.
Drag it to 15 years and the picture inverts: the expense ratio compounds, the locker rent compounds, and the gap narrows from the other direction.
Not sure how much gold belongs in your portfolio?
The right answer depends on what else you own — and on what you'd be selling to buy it. That's a conversation, not a calculator.
Talk it throughExhibit 4 — Forty-two years of the actual tape
Every gold argument is really an argument about the price series. So here is the price series — the RBI's own, from its Handbook of Statistics on the Indian Economy: average annual price of standard gold in Mumbai, financial year by financial year, 1983-84 through 2024-25. Then today's IBJA close on the end.
Pick a year you bought and a year you sold. Find out what gold actually did in between.
The chart opens on the whole record: buy in FY 1983-84, sell today, and gold compounded at about 10.6% a year in rupees. That is the number every gold advertisement is built on.
Now press "Show me the dead years."
The RBI's series says gold averaged ₹30,164 in FY 2012-13. Six years later, in FY 2018-19, it averaged ₹31,193. That is 3.4% — total. Not per year. A CAGR of 0.56%, over six years, while inflation ran at four to six percent annually. In real terms that money shrank by roughly a fifth.
Anyone who bought gold in 2012 waited most of a decade to break even after inflation. They were not wrong about gold. They were early, and early is indistinguishable from wrong for as long as it lasts.
Both facts come from the same RBI table. The 10.6% is real and the 0.56% is real. Which one turns out to describe your experience depends entirely on when you show up — and nobody buying today knows which of those two decades they are standing at the start of.
The tape has a bias you should know about. Roughly half of gold's long-run rupee return is the rupee falling, not gold rising. When you buy gold in India you are making two bets at once: on the metal, and against your own currency. The second bet has been the more reliable of the two.
Exhibit 5 — India has already voted
The Q1 2026 numbers from the World Gold Council are the clearest statement of what Indian buyers did when the price went vertical.
Read those three bars together. Total demand rose 10%. Jewellery collapsed to its second-lowest first quarter since 2000. Bars and coins nearly matched jewellery in tonnage for the first time — 62t against 66t. And ETFs tripled.
This is a country that did not stop buying gold. It stopped buying gold as jewellery.
The June data confirms the direction: ₹34.4 billion into gold ETFs in a single month, the strongest since February, with 135,000 new folios opened. Total gold ETF accounts in India now stand at 12.5 million, holding 119 tonnes. AMFI recorded ₹3,443 crore of net gold ETF inflows in June alone, after outflows in May.
Meanwhile the RBI holds 880.52 tonnes and has not bought since mid-2025. Gold's share of India's foreign exchange reserves climbed from about 12% to 17% over the past year — almost entirely because the price rose, not because the central bank added. Even the RBI is now a passive beneficiary rather than an active buyer.
The "Nothing" option deserves a fair hearing
Three things have changed that make "no gold" a more defensible position than it was two years ago.
Sovereign Gold Bonds are gone. No new tranche since February 2024, no calendar for FY 2025-26 or FY 2026-27, and the Finance Minister has confirmed there are no immediate plans. The Economic Affairs Secretary called it a high-cost borrowing method that failed to reduce imports. SGBs paid 2.5% annual interest and were tax-free at maturity — the single best gold instrument India ever had. It no longer exists for new money. You can buy old tranches on the NSE and BSE, but liquidity is thin and premiums are unpredictable.
Digital gold is not regulated. SEBI's press release of 8 November 2025 was unusually blunt: digital gold products are neither notified as securities nor regulated as commodity derivatives, and investors in them are not covered by SEBI's investor protection mechanisms. It was a caution, not a ban — digital gold remains legal, and June 2026 volumes were still ₹25.5 billion. But if the platform fails, you are an unsecured creditor. That is the entire risk in one sentence.
And you may already own more gold than you think. Most Indian households do. Jewellery counts. If your family holds 200 grams in a locker, that is roughly ₹28 lakh at today's price — and for many households it is already the largest single asset outside the home.
Against that, the case for holding some gold is genuinely strong, and the World Gold Council's own portfolio work puts it at 7.5% to 15% of an Indian portfolio, measured over nineteen years of risk-adjusted returns and drawdowns. The mechanism is not that gold returns more. It is that gold's correlation to equities goes negative precisely when equities fall, at a time when equity-bond correlations have turned positive and bonds have stopped doing that job.
The honest framing: gold is not a return engine. It is a drawdown absorber that occasionally has a spectacular decade. If you are buying it in July 2026 after an 81% year-on-year run, you are buying insurance at the highest premium it has been priced at in a generation — which is exactly when insurance is least worth buying.
Your verdict
Gold is one line in a plan, not the plan
How much, in what form, funded by what, and sold when — those four answers depend on the rest of your portfolio. Let's look at yours together.
Book a portfolio reviewObjections worth answering
Isn't a 15% import duty going to be reversed like it was in 2024?
It might be. The 2022 hike to 15% was reversed in July 2024, and the stated rationale this time — current account pressure and a weak rupee — is the kind of thing that changes. But you cannot buy on that basis. If the duty is cut, domestic gold falls relative to international gold and you take the hit as a holder. Treat the current price as the price, not as a temporary distortion you will be compensated for.
My jeweller says he buys back at full rate, no deduction.
Ask for it in writing, and ask what "full rate" means. Most buyback schemes return the 22K metal value, deduct a spread, and pay in store credit rather than cash. Exchange volumes are running 10–20% higher than usual this year and old gold made up 43–55% of jeweller sales last quarter, so the schemes are real — but they are designed to keep you inside the shop, not to make you whole.
Gold ETF or gold fund — which one?
If you have a demat account and want to invest a lump sum, the ETF is cheaper and reaches long-term tax status in twelve months instead of twenty-four. If you want to invest monthly, do not have a demat account, or want the purchase to sit alongside your other mutual fund holdings in a single statement, the gold fund route is more practical and the extra cost is small. Both track the same metal. Neither is a mistake.
Is physical gold ever the right investment choice?
For something you will wear or gift, yes, and no calculator is relevant. For wealth you intend to sell one day, hallmarked coins or bars from a bank or reputable dealer are the only physical form that makes arithmetic sense — and even then you are paying roughly 6% to get in and holding a storage and authenticity problem for the whole period.
How much should I hold?
The World Gold Council's research supports 7.5–15% of a portfolio. In practice, count the jewellery your family already owns before you add anything. Most people who think they hold no gold hold plenty.
Sources
- Reserve Bank of India — Handbook of Statistics on the Indian Economy, Table: Average Price of Gold and Silver in Mumbai (standard gold, 995 fineness), FY 1983-84 to FY 2024-25. Price series in Exhibit 4.
- Central Board of Indirect Taxes and Customs — Notifications 15/2026, 16/2026, 17/2026 and 18/2026-Customs, dated 12 May 2026, effective 13 May 2026. Import duty on gold raised to 15% (10% BCD + 5% AIDC) from 6%.
- World Gold Council — Gold Demand Trends: India Focus, Q1 2026; India gold market update: Import tightening (May 2026); India gold market update: Mixed demand signals (July 2026); Why gold in 2026? An anchor for Indian portfolios.
- AMFI — Monthly data, June 2026: gold ETF net inflows ₹3,443.23 crore.
- SEBI — Press Release PR No. 70/2025, 8 November 2025, Caution to public regarding dealing in 'Digital Gold'.
- Income Tax Act, 1961 as amended by Finance (No. 2) Act 2024 and Finance Act 2025 — holding periods and 12.5% LTCG rate without indexation.
- IBJA — Gold price, ₹1,41,159 per 10g (24K), close of 17 July 2026.
- GST rates on gold: 3% on metal value, 5% on making charges, per current CBIC schedules.
This article is educational and is not investment advice. Gold prices, import duties and tax rules change; every figure above carries its date. Calculator outputs are illustrative projections based on assumptions you select, not forecasts — actual returns will differ. Please consider your own circumstances, or speak to a qualified adviser, before acting. Punit Sharma is an AMFI Registered Mutual Fund Distributor.
Have questions after reading this?
I'm Punit Sharma — financial planner & derivative analyst. Happy to review your portfolio or answer any questions.