An exchange-traded fund (ETF) that tracks the domestic physical gold price is known as a gold ETF. They are passive investing tools that invest in gold bullion and are based on gold prices. Gold is frequently held in ornamental form in India, which entails some manufacturing and wastage costs (typically greater than 10% of the bill value). By putting money into a gold fund, this is avoided.
When you purchase gold ETFs, you are doing it in electronic form. ETFs that track gold may be bought and sold just like equities. When you actually redeem a Gold ETF, you receive the cash equivalent rather than actual gold. A dematerialized account (Demat) and a broker are used to trade gold ETFs, which makes it a very practical way to invest in gold electronically.
A Gold ETF's holdings are completely transparent due to its direct gold price. Furthermore, the ETFs have significantly lower costs compared to physical gold investments because of their distinct structure and creation mechanism.