The outflow comes after a strong rally in domestic gold prices this year, with investors appearing to book profits following gains in the yellow metal.
Gold ETF flows had remained largely positive in recent months amid heightened investor interest in safe-haven assets.
According to Nitin Agrawal, CEO – Mutual Funds, InCred Money, the reversal reflects profit booking after a sharp price run-up rather than a weakening of the asset class.
“This is not a bearish signal on gold; it reflects profit-booking after a sharp price run-up. The structural case for a measured gold allocation in retail portfolios remains intact,” he noted.
Experts said the trend also reflects a shift in investor behaviour following strong performance in the asset class.
Ashwini Shami, President and Chief Portfolio Manager, OmniScience Capital, said the fall in flows highlights a tendency among investors to react to recent price movements.
“The fall in gold prices triggered a net outflow from Gold ETFs, highlighting the tendency of investors to chase recent performance trends,” he said, adding that gold had seen a long streak of inflows before the recent reversal.
According to Feroze Azeez, Joint CEO, Anand Rathi Wealth, the latest outflows come after a sharp rally in gold prices, with investors reassessing return expectations and booking profits at elevated levels.
“After a strong run-up, future returns may not look as attractive as they did over the past year, prompting some investors to reallocate towards other asset classes,” he noted.
In contrast, silver ETFs continued to attract strong investor interest. The category recorded net inflows of ₹2,133 crore in May.
The divergence in flows comes amid a surge in precious metal prices and changing investor preferences. Gold prices have remained near record levels in recent months, while silver has gained attention from investors amid expectations of both industrial and investment demand.
The latest AMFI data also comes against the backdrop of operational restrictions imposed by some fund houses on gold investment products.
Earlier this month, HDFC Mutual Fund introduced temporary limits on subscriptions to its gold ETF and gold fund of fund schemes. More recently, other asset management companies, including Nippon India Mutual Fund, Tata Mutual Fund, Axis Mutual Fund and Aditya Birla Sun Life Mutual Fund, announced restrictions on large investments into select gold ETF products.
Despite the record outflow in May, gold ETF demand has remained robust on a year-to-date basis. Industry data released earlier by the World Gold Council showed that Indian gold ETFs had attracted strong inflows during 2026 even after recording their first monthly outflow in a year.
The latest trend suggests investors may be reassessing allocations after the sharp run-up in gold prices, while continuing to increase exposure to silver through ETF routes.