Digital gold sales hit record high in January
What's the story
India's digital gold sales have hit a new high, with purchases worth ₹3,926 crore recorded in January. The surge was driven by the popularity of Unified Payments Interface (UPI), which accounted for over 90% of all digital gold transactions. The data was provided by the National Payments Corporation of India (NPCI) and shows that 219 million transactions were made during this period.
Market recovery
Sales surged after 2-month low in November
Digital gold sales through UPI fell to around ₹1,200 crore in November after the Securities and Exchange Board of India(SEBI) cautioned investors about its unregulated status. However, the market rebounded in December with sales worth ₹2,100 crore across 180 million transactions. This was due to global uncertainties and market volatility driving demand for gold.
Investment strategy
Regulatory uncertainty and risks
The rise in digital gold sales can be attributed to its appeal as a safe haven investment, ease of purchase, and fractional ownership. Customers can buy gold from as low as ₹1 to nearly ₹2 lakh a day. However, regulatory uncertainty has led some social media influencers to warn customers against buying digital gold due to potential difficulties in withdrawing their money or gold if the platforms selling it shut down.
Investment alternatives
What is digital gold?
Most fintech platforms offer digital gold as a savings or investment product, with the gold value tokenized by companies like MMTC-PAMP or SafeGold. Customers can sell their gold whenever they want. Investing in digital gold comes with GST, storage costs, and platform fees. An alternative to this is Gold ETFs (exchange-traded funds), which are mutual funds investing in gold and offering fractional ownership at lower charges under SEBI regulation.