The reversal came alongside a broader recovery in exchange-traded fund (ETF) investments. Overall ETF inflows stood at ₹13,238 crore in June, compared with net outflows of ₹620 crore in the previous month.
Why did Gold ETF inflows rebound?
Market participants attributed the turnaround largely to investors increasing allocations after the recent correction in gold prices while continuing to use the metal as a portfolio diversifier amid global uncertainties.
Umesh Sharma, CIO–Debt at The Wealth Company Mutual Fund, said Gold ETFs witnessed renewed buying during June as investors capitalised on the recent price correction in gold. He added that the pickup in Gold ETF inflows was accompanied by stronger flows into other ETFs, reflecting broader investor interest in passive investment products.
Suranjana Borthakhur, Head of Distribution & Strategic Alliances at Mirae Asset Investment Managers (India), said the strong inflows into ETFs and Gold ETFs suggest investors are using passive products and gold as strategic asset allocation tools rather than for short-term tactical trades.
Rohit Sarin, Co-founder of Client Associates, said the return of inflows indicates that investors continue to view gold as an important portfolio diversifier even during periods of market volatility. According to him, the June data reflects investors balancing equity exposure with allocations to defensive assets.
What is the outlook?
Colin Shah, Managing Director of Kama Jewelry, said Gold ETFs had previously benefited from investors seeking liquidity and price transparency amid geopolitical uncertainty. However, he noted that the asset class remains sensitive to movements in global interest rates and currency markets, which could keep flows volatile in the near term.
He added that while Gold ETFs have become popular because of their convenience and lower investment threshold, physical gold is expected to remain a competing investment avenue despite relatively softer demand at present.
