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Informist, Wednesday, Jun. 11, 2025

 

By J. Navya Sruthi

 

MUMBAI – Gold exchange-traded funds recorded net inflows in May after net outflows in March and April as gold prices corrected during the month, analysts said. They expect inflows to continue in gold ETFs amid global uncertainty. 

 

The 20 gold ETFs saw a gross inflow of INR 12.66 billion in May and redemptions worth INR 9.74 billion, resulting in a net inflow of INR 2.92 billion, according to data released Tuesday by the Association of Mutual Funds in India. However, the gross inflow in May was lower than INR 16.63 billion seen in April and redemptions were lower than INR 16.69 billion in April. 

 

In April, the net outflows were probably on account of profit booking, Venkat Chalasani, chief executive of the Association of Mutual Funds in India said in a conference call addressing the media. "Now, we are witnessing the positive close, reversing the previous trend, people are looking at on account of volatility and expecting (gold) prices can slightly go up," he said. 

 

In March and April, gold prices rallied to an all-time high of INR 99,358 per 10 grams due to global uncertainties, which prompted tactical exits from gold ETFs as many investors opted to realise gains, Kedia Advisory said in a note. On Apr. 22, the most-active August contract on MCX had hit an all-time high of INR 99,358 per 10 gm, which was up about 10% from INR 90,503 per 10 gm, the closing price on Apr. 1.

 

However, in May, gold prices had moderated to around INR 90,500 per 10 grams, creating a fresh entry point for long-term and risk-conscious investors, the brokerage firm said. "Investors likely viewed this dip in gold prices as a strategic buying opportunity through the ETF route."

 

Meanwhile, the net assets under management in gold ETFs rose slightly by over 1% on month to INR 624.53 billion in May. In April, despite net outflows, the net assets under management in gold ETFs had risen over 4% on month as the gold price was at a record high.  

 

On a yearly basis, the net assets under management significantly rose by 97% in May from INR 316.9 billion in May 2024. However, the net inflows during May were sharply down by 65% on year from INR 8.27 billion during the same period a year ago.    

 

In May, Tata Gold ETF gave the highest monthly return of 2.53%, and Edelweiss Gold and Silver ETF Fund of Funds – Direct Plan, Motilal Oswal Gold and Silver ETFs Fund of Funds – Direct Plan, Axis Gold ETF, SBI Gold ETF, and Mirae Asset Gold ETF were among the top 10 in terms of returns, as per data from Value Research. The lowest return of 0.12% was seen in DSP Gold ETF Fund of Funds – Direct Plan, the data showed. Meanwhile, gold on the Multi Commodity Exchange of India in May gave a negative return of 0.01%, against 4.6% in April. So far during the calendar year, gold has delivered a return of over 26% on the MCX.

 

On May 31, the number of folios in gold ETFs was nearly 7.4 million, up from 7.1 million a month ago. According to AMFI data, in May, there were no new gold ETF schemes launched by any of the fund houses.

The inflows at net level in May indicate a tactical re-entry by investors after profit booking during the previous two months, supporting a bullish sentiment in the short term, Kedia Advisory said. In the long-term, the brokerage expects inflows to continue in gold ETFs as these funds serve as a strategic hedge for wealth preservation over the period on the back of geopolitical tensions, inflation risks, and central bank policy changes.  End

 

Edited by Akul Nishant Akhoury

 

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