Gold ETFs Draw Record Rs 3,751 Crore Inflows In January As Equities Underperform
January was the ninth consecutive month of net inflows into gold ETFs — passive investment instruments that track gold prices.
Net inflows into gold exchange-traded funds hit a record high in January at Rs 3,751 crore, according to the data released by the Association of Mutual Funds in India on Wednesday. The previous record figure was clocked in October.
January was the ninth consecutive month of net inflows into gold ETFs — passive investment instruments that track gold prices.
The surge comes after inflows slowed to a nine-month low in December. Indians poured Rs 11,226 crore into gold ETFs in 2024.
Net assets under management of gold ETFs stood at a record Rs 51,839 crore last month. It is to be noted that the AUM also reflects the appreciation in prices.
The AUM has jumped 54% on a yearly basis as investors increasingly turn to the proxy and tax-efficient way of investing in gold without the hassle of physically storing it.
The heightened investor interest in gold ETFs comes amid economic uncertainty driven by US President Donald Trump's tariff threats and rate cuts by major central banks, including the Reserve Bank of India.
"Trump's policies are expected to cause significant shifts in global trade dynamics, potentially leading to high inflation. Additionally, rising geopolitical risks have increased investor interest in gold as a hedge against uncertainty and a means to enhance portfolio returns," said Sugandha Sachdeva, market analyst and founder of SS WealthStreet.
Besides these factors, asset class returns also have a play. While gold is up 12% in the domestic market, equities have taken a beating with the benchmark Nifty 50 sliding 2.3% so far this year.
Investors are taking cues from key central banks, which have been accumulating gold in large quantities over the past three years, reinforcing confidence in the metal’s stability and value, Sachdeva said.
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Another contributing factor to the lure of gold ETFs is the absence of new sovereign gold bonds from the government. The last time an SGB was issued was in February last year. The scheme was introduced in 2015 in an effort to reduce the gold import burden.
Discontinuation of sovereign gold bonds is in the talks, Economic Affairs Secretary Ajay Seth said earlier this month, adding that new issues will be unlikely.
Meanwhile, the net inflow of the mutual fund industry came at Rs 1.88 lakh crore against an outflow of Rs 80,355 crore in the previous month, AMFI data showed. The net AUM of the industry is at Rs 67.3 lakh crore versus Rs 66.9 lakh crore against last month.
The SIP contribution stood at Rs 26,400 crore in January, compared to Rs 26,459 crore in December 2024.
