Gold ETFs Get Attractive: June Reading Shows Highest Inflow In Five Months

Gold exchange-traded funds recorded the highest inflows in five months in June, even as bullion prices in the domestic market traded near life highs.

The funds witnessed a net inflow of Rs 2,080 crore last month compared to Rs 292 crore in May, according to data released by the Association of Mutual Funds in India on Wednesday. Redemptions were low.

"This is a safe haven moment and people did try to book profits. In June, we have seen more inflows and positive inflows with lower redemptions," according to Venkat Chalasani, chief executive of AMFI. Silver ETFs also saw net inflow of more than Rs 2,000 crore, he said.

Bullion ETFs are passive investment instruments that track the price of gold. Investors had pulled money out of gold ETFs in March and April to book profits amid a surge in prices.

Net assets under management of gold ETFs stood at a record Rs 64,777 crore last month, a 53% year-on-year increase. It is to be noted that the AUM also reflects the appreciation in bullion prices.

In June, the average gold spot price rate on the MCX was Rs 97,000. In May, prices had stabilised from the April highs.

Gold ETFs are a proxy and tax-efficient way of investing in the precious metal, without the need to physically store it. There are over 20 bullion ETFs in India, with the largest being Nippon India ETF Gold BeES.

Global gold ETF flows flipped positive in June, ending the first half of the year with the highest semi-annual inflow since 2020, as per the World Gold Council. All regions saw inflows last month, with North American and European investors leading the charge.

ETFs drew $1.13 billion, the AUM rose to a month-end peak and holdings bounced to the highest in 34 months.

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