Jakarta. Indonesia's capital market is preparing to introduce a new gold-based investment product through the launch of an Exchange-Traded Fund (ETF) backed by physical gold. The product is expected to mark a significant innovation in the country's financial industry by combining the appeal of gold investing with the flexibility of trading on the Indonesia Stock Exchange (IDX).

The Gold ETF is part of the IDX's broader ETF reform program aimed at expanding the range of investment products available in the capital market. The exchange expects the product to provide retail and institutional investors with easier, more modern, liquid, and affordable access to gold investment.

Amid persistent global economic uncertainty, gold has regained its appeal as a preferred investment asset. A weaker US dollar, shifting global interest rate expectations, and heightened geopolitical tensions have prompted investors to seek safe-haven assets. As a traditional hedge against uncertainty, gold-based investment instruments are becoming increasingly relevant as portfolio diversification tools.

IDX data showed gold was among the best-performing asset classes throughout 2025. Over the past decade, the metal has delivered competitive returns while maintaining a relatively low correlation with equities and bonds, reinforcing its role as a portfolio diversifier.

Indonesia is also well positioned in the global gold industry. As one of the world's largest gold producers with substantial reserves, the country has strong potential to further develop its bullion ecosystem. The introduction of a Gold ETF is expected to help bridge domestic gold production with investment demand from both local and international investors.

Indonesia's capital market investor base continues to expand rapidly. As of the end of May 2026, the number of investors had surpassed 27 million. Supported by a large market capitalization and rising daily trading activity, the capital market is considered well positioned to become a more efficient and transparent distribution channel for gold investment.

The Gold ETF will take the form of a collective investment contract mutual fund whose units are traded on the IDX, similar to listed stocks. Investors will be able to purchase the product through online trading platforms using real-time exchange mechanisms.

Unlike physical gold, which requires storage and carries the risk of loss, the Gold ETF will provide exposure to gold prices through exchange trading while being backed by physical gold securely held by licensed custodians and gold depositories. Investors will gain practical, transparent, and integrated access to gold price movements within the capital market ecosystem.

The underlying gold assets must meet minimum purity standards of 99.5% under the global London Bullion Market Association (LBMA) standard or 99.9% under Indonesia's National Standard (SNI). Most of the fund's assets will be invested in gold, while a small portion may be allocated to cash and money market instruments.

The Gold ETF may also be issued under sharia principles. The product has received approval through the Indonesian Ulema Council's National Sharia Council (DSN-MUI) Fatwa No. 163/DSN-MUI/VIII/2025 on Sharia Gold ETFs. The fatwa is expected to broaden access for sharia investors seeking gold investment products that comply with Islamic principles.

Under the fatwa, Sharia Gold ETFs must be free from elements of riba (usury), gharar (uncertainty), maysir (gambling), and dharar (harm). Each unit issued must also be fully backed by physical gold held in an allocated account.

From a regulatory standpoint, the development of Gold ETFs has received full support from the Financial Services Authority (OJK), which issued OJK Regulation (POJK) No. 2 of 2026 on Exchange-Traded Mutual Funds with Gold as the Underlying Asset.

Meanwhile, the IDX has revised several listing and trading regulations to accommodate Gold ETFs in Indonesia's capital market, underscoring the commitment of regulators and industry players to building a more robust market-based gold investment ecosystem.

IDX President Director Jeffrey Hendrik said industry interest in issuing Gold ETFs has been strong. "Currently, there are seven investment managers that have submitted preliminary listing agreement applications for Gold ETFs to the IDX," Jeffrey said during the IDX's annual general meeting (AGM) press conference on June 29.

In addition, an IDX survey of retail and institutional investors found that gold-based ETFs are among the most sought-after products for development in Indonesia's capital market.

Nevertheless, investors should remain aware of the risks associated with Gold ETFs. These include fluctuations in global gold prices, trading liquidity risks, and the potential for tracking error between ETF performance and the benchmark spot gold price.

Despite these risks, the introduction of Gold ETFs represents another step forward in Indonesia's efforts to build a more inclusive, innovative, and internationally competitive financial ecosystem.