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Informist, Friday, Jul. 11, 2025

 

By J. Navya Sruthi

 

MUMBAI – Inflows into silver exchange-traded funds are expected to surpass those of gold ETFs in the near-term on improved industrial demand as geopolitical tensions have eased, analysts said. After giving over 25% return so far in 2025, analysts believe gold has lost its lustre as the market has factored in the uncertainties related to US tariffs. The inflows seen in silver ETFs in June are expected to continue in the near term, they added.

 

Silver and gold prices on the Multi Commodity Exchange of India rose to an all-time high in June because of geopolitical tensions in West Asia. Tracking the record high prices on MCX and a rally on COMEX due to the Israel-Iran conflict, investors invested in gold and silver ETFs. Moreover, rising industrial applications of silver has made silver ETFs more attractive to investors. This pushed the net inflows in silver ETFs in June to as high as gold ETFs, analysts said.

 

According to data released Wednesday by the Association of Mutual Funds in India, net inflows in 15 silver ETFs were up a whopping 135% on month and 148% on year at INR 20.04 billion in June. Net inflows of 20 gold ETFs skyrocketed to INR 20.81 billion in June from INR 2.92 billion the previous month, the data showed. On a yearly basis, net inflows into gold were up a whopping 187% from INR 7.26 billion in June 2024.

 

On Jun. 18, silver prices on MCX rose over 23% on year to a fresh record high of INR 109,748 per kilogram. On Jun. 16, gold prices on the domestic exchange had risen to new record high of INR 101,078 per 10 grams, up over 29% on year.

 

Assets under management of both silver and gold ETFs also increased significantly on an annualised basis. The assets under management of silver ETFs rose over 20% on month and 171% on year to INR 202.86 billion as of Jun. 30, AMFI data showed. The assets under management of gold ETFs rose nearly 4% on month and 89% on year to INR 647.77 billion as of Jun. 30. 

 

The number of folios in gold ETFs rose to 7.7 million as of Jun. 30, from 7.4 million a month ago. The folios in silver ETFs saw a sharp increase in June to 910,253 from 837,703 as of May 31.

 

GOLD LOSES STEAM

The surge in inflows seen in gold ETFs in June is unlikely to continue in the coming months, analysts said, adding that there will be moderate inflows into these funds due continued uncertainty of US' trade policy. Historically, gold in dollar terms has not really been able to sustain gains beyond 30%, analysts said. In 2025, gold prices on COMEX rose over 33% on year to an all-time high of $3,500 per ounce in April, they said. With no immediate trigger for gold prices to rise back to the all-time high, analysts said there would be a consolidation in gold prices, limiting the flows into gold ETFs.

 

"Gold's price has corrected about 5% from its mid-June highs, partly due to easing recession fears and stronger-than-expected US jobs data, which tempered rate cut expectations," Riya Singh, research analyst, commodities and currency at Emkay Global Financial Services, said in a note. "These counterforces suggest ETF inflows may moderate in the coming months, unless geopolitical or economic shocks re-escalate."

Ajay Kedia, director at Kedia Advisory, said gold ETFs may see some pause when it comes to net inflows as the precious metal has given most returns so far in 2025. Moreover, tensions in West Asia have also eased, making the precious metal less attractive to investors, he added.

 

SILVER SHINES BRIGHT

The rise in net inflows into silver ETFs in June shows the white metal's improved risk-reward profile, Singh said. "The gold:silver ratio fell below 90, its lowest in over three months, indicating relative strength in silver." Silver could offer better short-term upside given its dual industrial and monetary appeal, attractive valuation, and growing speculative interest, she said.

 

Kedia is bullish on silver for next six months due to a fall in the gold:silver ratio. In the next two months, he expects prices on MCX to rise to INR 110,000-INR 114,000 per kg. He sees resistance for silver at INR 130,000 per kg by the end of 2025. "The metal (silver) is benefitting from renewed industrial demand optimism amid trade deal progress, especially between the US and China, and expectations of fiscal expansion in key economies," Singh said.   

 

"But in case of heightened market stress or geopolitical shocks, gold is likely to attract stronger flows. In essence, silver may offer better returns in a risk-on environment, while gold continues to dominate flows in risk-off regimes," Singh said.

 

Addressing media on Wednesday, AMFI Chief Executive Venkat Chalasani said there is no shift from gold ETFs to silver ETFs. In fact, there are flows in both the precious metals. "...whenever there is a risk aversion, you find that both (gold and silver) of them surge," he added.

 

TOP FUNDS

In June, Edelweiss Gold and Silver ETF Fund of Funds gave the highest monthly return of 4.33%. Motilal Oswal Gold and Silver ETFs Fund of Funds – Direct Plan, LIC MF Gold ETF Fund of Funds – Direct Plan, ABSL Gold – Direct Plan, and Union Gold ETF Fund of Funds – Direct Plan were among the top 10 in terms of returns, as per data from Value Research.

 

On the other hand, Invesco India Gold ETF Fund of Funds – Direct Plan gave the lowest return of 0.16%, the data showed. Gold contracts traded on MCX gave a negative return of nearly 1% in June, against a negative return of 0.01% in May.

 

Meanwhile, Axis Silver Fund of Fund – Direct Plan gave the highest monthly return of 9.6% in June. ICICI Prudential Silver ETF Fund of Fund – Direct Plan, ABSL Silver ETF Fund of Fund – Direct Plan, HDFC Silver ETF Fund of Fund – Direct Plan, UTI Silver ETF, and Nippon India Silver ETF Fund of Fund – Direct Plan, were among the top 10 in terms of returns, as per data from Value Research.

 

Tata Silver ETF gave the lowest return of 7.76% in June, the data showed. Meanwhile, silver on the MCX gave a return of over 4% in June, compared to a return of 3.7% in May.  End

 

US$1 = INR 85.86

 

With inputs from Ashutosh Pati

Edited by Ashish Shirke

 

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