Gold exchange-traded funds (ETFs) in India recorded their biggest-ever monthly inflow in September, driving total assets under management to a record $10 billion as investors turned to the precious metal amid subdued equity market returns.
Rising inflows into gold ETFs are expected to boost gold imports in India, the world’s second-largest consumer, supporting global prices that recently touched record highs. However, the surge in imports could also widen India’s trade deficit and put additional pressure on the rupee.
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Traditionally dominated by jewellery, bars, coin, India is witnessing a shift in the investor preference with urban investors increasingly shifting to gold ETFs as the price rally to record highs.
According to data from the World Gold Council (WGC), gold ETFs witnessed inflows of $902 million (7.3 tons) in September, taking their total holdings to a record 77.3 tons.
Indian gold ETFs have attracted a record $2.18 billion in inflows so far this year, surpassing all previous annual figures. By comparison, inflows stood at $1.28 billion in 2024, $295.3 million in 2023, and a mere $26.8 million in 2022.
According to the WGC, the surge in gold ETF investments was fueled by a weaker local currency and heightened investor demand, as people sought a safe haven amid sluggish domestic stocks and persistent geopolitical and trade uncertainties
Local gold prices have witnessed a surge of 60% on year to date basis post witnessing a gain of 21% last year. On Wednesday, the local gold price reached a peak of Rs 1.22 lakh per 10 grams.
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Investors who previously had minimal or no exposure to gold are now ramping up their allocations, pouring substantial funds into the metal and fueling ETF inflows, Vikram Dhawan, head of commodities and fund manager at Nippon India Mutual Fund, which manages India’s largest gold ETF, told Reuters.
Dhawan added that this shift indicates that even if gold prices experience a correction, investors are likely to view it as a buying opportunity, potentially driving further inflows
Rising inflows into gold ETFs are expected to boost gold imports in India, the world’s second-largest consumer, supporting global prices that recently touched record highs. However, the surge in imports could also widen India’s trade deficit and put additional pressure on the rupee.
Also Read | Gold funds vs ETFs: Where should mutual fund investors place their bets now?
Traditionally dominated by jewellery, bars, coin, India is witnessing a shift in the investor preference with urban investors increasingly shifting to gold ETFs as the price rally to record highs.
According to data from the World Gold Council (WGC), gold ETFs witnessed inflows of $902 million (7.3 tons) in September, taking their total holdings to a record 77.3 tons.
Indian gold ETFs have attracted a record $2.18 billion in inflows so far this year, surpassing all previous annual figures. By comparison, inflows stood at $1.28 billion in 2024, $295.3 million in 2023, and a mere $26.8 million in 2022.
According to the WGC, the surge in gold ETF investments was fueled by a weaker local currency and heightened investor demand, as people sought a safe haven amid sluggish domestic stocks and persistent geopolitical and trade uncertainties
Local gold prices have witnessed a surge of 60% on year to date basis post witnessing a gain of 21% last year. On Wednesday, the local gold price reached a peak of Rs 1.22 lakh per 10 grams.
Also Read | Quant Mutual Fund remains tilted toward largecaps; increase exposure in NBFCs and PSU banks
Investors who previously had minimal or no exposure to gold are now ramping up their allocations, pouring substantial funds into the metal and fueling ETF inflows, Vikram Dhawan, head of commodities and fund manager at Nippon India Mutual Fund, which manages India’s largest gold ETF, told Reuters.
Dhawan added that this shift indicates that even if gold prices experience a correction, investors are likely to view it as a buying opportunity, potentially driving further inflows
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