India’s one of the biggest festivals is Dhanteras and Diwali, and people across the country celebrate it with love, lights, and joy. As a part of the ritual, people in India buy gold on Dhanteras because the day is considered auspicious for welcoming prosperity while also aligning with practical investment habits that treat gold as a store of value and a diversifier alongside equities and cash equivalents.

The tradition blends culture and finance, and modern markets reinforce it through regulated avenues, such as Sovereign Gold Bonds, Gold ETFs, and even a special Muhurat trading session held in the stock market on Diwali, which symbolises a fresh, optimistic start to the market year. In this article, let’s talk about why people buy gold on Diwali!

Significance of Dhanteras

Dhanteras marks the beginning of the Diwali period and is related to the blessings of Goddess Lakshmi and Lord Dhanvantari. It connects the ideas of wealth, health, and auspicious new beginnings in households across India. The Government of India publicly greets the nation on Dhanteras, reflecting the festival’s mainstream cultural significance that continues to shape consumer and investor behaviour each season.

In practice, the day is observed with small but symbolic purchases of precious metals, especially gold, and new assets, blending tradition with prudent financial planning for the year ahead.

This is important as India is the world’s second largest consumer of gold, and gold demand trends continue to be significant even in a high-price environment, supported by consumer jewellery purchases and investment flows. The country accounts for up to 26% of the total global demand for gold. Not just that, Indian households hold around 34,600 tonnes of gold as per reports.

Not just jewellery, Indians have been investing in gold using new tools like ETFs and Digital gold too. In September 2025, the World Gold Council reported that exchange-traded funds (ETFs) in India hit the biggest monthly inflow, recording the total assets under management (AUM) at US$10 billion. Such underpinnings reinforce Indian festive-season buying, as households tie auspicious timing to long-term wealth habits by investing in the best gold ETFs.

Why Do People Invest in Gold on Dhanteras?

Buying gold on Dhanteras isn’t just a festive impulse; it’s a tradition that has been around for centuries, deeply woven into India’s cultural and financial fabric.

There’s also a story behind it: according to mythology, gold’s shine once protected a prince from harm, making it a symbol of safety and prosperity.​

Blending Tradition with Practicality

Bringing home gold on Dhanteras is a way to honour heritage, show gratitude for prosperity, and start the year with a sense of new beginnings. For many families, buying even a tiny gold coin is also about creating a legacy, a gift passed down, celebrated, and cherished year after year.​

Physical gold, particularly jewellery, holds a unique sentimental value that digital assets can’t match.

Prosperity That Lasts

Gold acts as a store of value. It is something that you or your family can rely on during tough times, inflation, or market fluctuations. While other assets may lose their shine or become outdated, gold retains its value and is always easy to liquidate, regardless of the economic climate.​

On Dhanteras, this practical side meets the cultural one, inviting not just good fortune, but building a financial safety net.​

As an Investment Diversifier

Dhanteras isn’t just about buying for buying’s sake; it’s also the perfect moment to make smart investment decisions.​ When it comes to investments, gold helps reduce overall portfolio risk because, as a commodity, it behaves differently from company shares during stress events and policy shifts, which is valuable for long-term wealth building.

When equity markets wobble or inflation spikes, gold’s global demand base and safe-haven status can support prices, offering stability when other assets are volatile. That stability is why many portfolios include a modest gold allocation, especially around times when long-term purchases are considered auspicious and intentional.

How to Invest in Gold in India

Each route has trade-offs, sentimental value and wearability versus interest income, tax features, and lower friction costs, so your selection must align with purpose and holding period.

Sovereign Gold Bonds

SGBs are issued by the Reserve Bank of India on behalf of the Government and are denominated in grams of gold, making them a clean, paperless way to hold gold as an asset. They carry a fixed 2.5% annual interest on the initial investment amount, have an 8-year maturity with an exit option after the fifth year, and use market-linked redemption based on 999-purity prices published by the Indian Bullion and Jewellers Association (IBJA).

Capital gains on redemption at maturity are tax-exempt. This makes SGBs a suitable long-term choice compared to the costs of buying gold physically and the risks.

Gold ETFs

Gold ETFs trade on stock exchanges and aim to mirror domestic gold prices. They provide exposure to gold indirectly, making them practical for small, periodic allocations. These vehicles bring daily liquidity, transparent pricing, and familiar brokerage access, aligning with the behaviour of equity investors who prefer demat and exchange-led systems.

Gold ETFs can be rebalanced alongside equity and debt funds to keep asset allocation on track over time.

Electronic Gold Receipts (EGRs)

Electronic Gold Receipts are a SEBI-recognised security representing gold that’s vaulted with registered vault managers, created under the Gold Exchange framework approved in 2021 and subsequently operationalised via detailed circulars and risk-management rules. The Government notified EGRs as “securities” under the Securities Contracts (Regulation) Act, enabling listing and trading on recognised exchanges under SEBI oversight.

Depositories outline how EGRs are held in demat, standardised by denominations, and can be withdrawn into physical gold via authorised withdrawal centres under the framework. SEBI’s master circular on EGRs consolidates rules and helps standardise the market’s plumbing, which supports fair price discovery and investor confidence.

Over time, EGRs may bridge physical and financial markets more efficiently, helping jewellers, refiners, and investors transact cleanly around festivals and beyond.

Digital Gold

Digital gold allows buyers to purchase fractional 24K gold online from providers, with the provider storing the corresponding physical gold in insured vaults and offering sell or redeem options later. Many platforms host these providers, allowing small‑ticket purchases and redemptions linked to live provider quotes.

DigiGold is promoted for micro‑savings, convenience, and quick redemption or conversion to jewellery, which fits festive and small recurring purchase behaviour.

Which Gold Option Should You Choose?

• Sovereign Gold Bonds (SGBs): These are suitable for those who prefer a hands-off, long-term investment. You earn 2.5% annual interest, get tax-free redemption at maturity, and avoid the hassles of storage and making charges. However, they are not always available for investment as they are issued by the RBI at a specific time for a limited period only.
• Gold Exchange-Traded Funds (ETFs): Consider this option if you prefer exchange-based investing. Gold ETFs let you buy and sell gold units easily using your demat account, just like stocks.
• Electronic Gold Receipts (EGRs): These suit you if you want 100% transparency and security through SEBI-regulated exchanges. EGRs represent real, vaulted gold that you can eventually convert into physical metal under official exchange rules.
• DigiGold: This is suitable if you want to start small or make quick, convenient purchases through apps or platforms. The gold you purchase is stored with trusted partners and can be sold or converted into coins at a later time.
• Jewellery: Consider jewellery if you want to celebrate tradition and sentiment this festive season. Stick to timeless designs and transparent pricing to preserve resale value and minimise losses due to making charges.

If you want to invest in gold right now, the perfect timing is about to approach. On Diwali, exchanges conduct a special one-hour Muhurat trading session viewed as an auspicious stock market opening, even though the day is a trading holiday otherwise. The session symbolises a fresh, optimistic start to the new Samvat year, and many market participants make token purchases as a gesture of prosperity and continuity.

This year, the National Stock Exchange (NSE) announced Muhurat trading 2025 on Tuesday, October 21, with a normal market window from 13:45 to 14:45 hours, and a trade modification cutoff at 14:55 hours. You can use this time to invest in gold.

Conclusion

Buying gold on Dhanteras blends faith with finance: auspicious timing meets an asset that can stabilise portfolios and preserve purchasing power across cycles. Regulated products like SGBs, Gold ETFs, and EGRs ensure that you balance emotion with structure, liquidity, and tax-aware planning. So, are you ready to buy gold this Diwali? Happy Dhanteras and happy trading!