Steady interest in gold ETFs continues for a sixth month
Indian investors have kept buying exchange-traded funds (ETFs) that track the yellow metal for the sixth consecutive month. The sustained inflows reflect a mix of portfolio hedging, easy access to the asset, and ongoing concerns about global and domestic economic uncertainty.
Why Indians are buying gold ETFs
- Safe-haven appeal: Gold is seen as protection against inflation, currency weakness and geopolitical risk.
- Convenience and liquidity: ETFs let investors buy and sell gold on the stock exchange without needing to handle physical metal.
- Cost efficiency: Compared with storing physical gold, ETFs often come with lower transaction and storage costs.
- Systematic investing: More investors are using SIPs and regular contributions into gold ETFs to build exposure gradually.
- Portfolio diversification: Adding gold can reduce overall portfolio volatility during market stress.
Who is driving the demand?
Demand is coming from a mix of retail and institutional investors. Retail participation has been notable, with younger investors and those new to markets choosing ETFs for an easy route into gold. Institutional buyers and fund managers also add exposure when seeking downside protection.
What this means for investors
Gold ETFs offer a practical way to tap into the yellow metal without the hassles of storage or making. However, gold does not generate income like dividends or bond coupons, and prices can be volatile. Financial advisers typically recommend keeping a modest portion of savings in gold—often between a small single-digit percentage and around 10%—depending on individual goals and risk tolerance.
Looking ahead
Flows into gold ETFs will likely stay sensitive to a few key factors: inflation trends, central bank policy, the rupee’s movement, and global geopolitical developments. Seasonal demand at home and movements in international gold prices will also shape investor behaviour. For now, steady ETF inflows suggest many Indians continue to view gold as a useful part of a balanced investment strategy.