Exchange traded fund concept. A bull and bear besides the golden text ETF. istock photo for BL
| Photo Credit:
aprott
With gold and silver prices touching new peaks, investors are increasingly choosing to invest in exchange traded funds backed by the precious metals, as they are much cheaper than the metals themselves, while also providing the convenience of easy liquidity.
Exchange traded funds are a cheaper way to get exposure to the precious metals, whose prices have spiked sharply in recent months, making them unaffordable to large segments of the population.
Investments in gold ETFs have zoomed multi-fold in the quarter ended August to ₹5,527 crore from ₹209 crore logged between March and May with many gold jewellery purchasers parking their money in ETFs .
Similarly, silver ETF investments in the same period were up at ₹5,668 crore in the quarter ended August against ₹2,278 crore, in the quarter to May.
AUM surges
In fact, gold and silver ETFs have garnered investment of ₹11,467 crore and ₹8,603 crore so far this year. The assets under management of gold ETFs have surged 40 per cent to ₹72,496 crore last month against ₹51,839 crore in January even after consistent profit-booking by investors.
Gold prices have rallied 34 per cent to ₹110,869 per 10 gram against ₹82,480 in January. Globally, the yellow metal prices were up 32 per cent to $3,698 an ounce against $2,798 an ounce in January.
Jigar Trivedi, Senior Research Analyst, Reliance Securities, said gold traded near a record high ahead of the US Federal Reserve’s two-day policy meeting that starts Wednesday. Markets are all but certain the Fed will deliver a 25-bps rate cut on Wednesday, the first since December, he added.
The Fed’s meeting comes amid challenges, including a legal dispute over its leadership and US President Donald Trump’s efforts to sway monetary policy, he said.
Manav Modi, Analyst – Precious Metal -Research, Motilal Oswal Financial Services, said central banks globally have been adding 1,000 tonnes of gold annually to the reserves for last couple of years.
Though the pace has been a bit slower this year, he added it was very consistent in terms of net buying for major central banks, and this will continue to support the prices.
Pallav Bagaria, Director at Sapient Finserv, said investors tend to chase assets after seeing past returns and gold’s performance over the last few years has been phenomenal.
“Reserve managers across the globe have been steadily accumulating gold, and recently we came across data which show central banks holding in gold as a percentage of total reserves have crossed USD assets for the first time, which has provided an impetus to the flows,” he added.
Other factors
This apart, the suspension of sovereign gold bond issuances is another reason for rising flows into ETFs though both are not similar product, he said.
Saumil Gandhi, Senior Analyst – Commodities at HDFC Securities, said investors’ preferences are shifting toward digital gold in the form of (ETFs), mutual funds and SGBs (in secondary market) as they offer liquidity, flexibility, transparency, absence of storage issues, easy tracking, lower transaction costs and no concerns about purity.
Though jewellery demand has decreased, investment demand for gold has risen due to strong returns provided over the past three years, he added.
Published on September 16, 2025