Gold ETFs Draw Rs 2,189.5 Crore From Investors Amid High Prices

Indian investors remained glued to gold exchange-traded funds for a fourth straight month in August, with net inflows worth Rs 2,189.5 crore, according to data released by the Association of Mutual Funds in India on Wednesday. The previous month witnessed a net inflow of Rs 1,256 crore.

Bullion ETFs are passive investment instruments that track the price of gold. They are a proxy and tax-efficient way of investing in the precious metal, without the need to physically store it. There are over 20 such funds in India.

Gold prices have surged recently on hopes the US Federal Reserve will start cutting interest rates amid souring US economic outlook. Interest rates and gold prices are typically inversely related.

In August, the average gold spot price rate on the MCX was Rs 99,626 per 10 grams, up 4% over the previous month.

Notably, high gold prices have not encouraged investors from booking profit in ETFs, indicating continued enthusiasm for the asset.

Net assets under management of gold ETFs stood at a record Rs 72,495.6 crore in August. It is to be noted that the AUM also reflects the appreciation in bullion prices.

Global gold ETFs saw their third consecutive month of inflows in August, according to the World Gold Council. Investors added $5.5 billion in such funds, extending their inflow streak to three months. August inflows and a further rise in the gold price pushed global gold ETFs’ total AUM 5% higher to $407 billion, setting a new month-end record, a WGC report said.

Meanwhile, actively managed equity mutual funds recorded a Rs 33,430.37 crore inflow during August, lower by 22% compared to the inflow of Rs 42,702.35 crore recorded in July, as per AMFI.

Inflows across the board saw its slip as compared to July. Net inflow of the mutual fund industry was at Rs 52,442.78 crore, as compared to an inflow of Rs 1.79 lakh crore the previous month.