Gold funds are those which form a part of Mutual fund product, however, one should not confuse with gold etf as both are different from an investment avenue.
Gold funds are equity oriented schemes which invest in gold ETFs, which are listed on the stock exchanges. They invest in companies which belong to gold sector.
In this case, the movement of the fund depends on gold ETFs, which in turn directly track gold prices.
The management fee for gold savings funds is higher, compared to an ETF.
Investors who are not comfortable with trading and who do not hold a demat account can opt for this. However, it comes with additional cost as you have to pay maintenance fee for gold fund as well as gold ETF. They also have high exit loads.