The robust inflows into gold exchange-traded funds (ETFs) continued for the third month in October, taking the average assets under management past the ₹1 lakh crore mark.
Net inflows into gold ETFs accelerated from ₹2,189.51 crore in August, followed by a record buying of ₹8,363.13 crore in September, and stayed elevated at ₹7,743 in October as the corpus crossed the ₹1 lakh crore mark, as per Amfi data.
In the past two months, net inflows into gold ETFs have surged, reflecting renewed investor interest in the yellow metal. At the same time, allocations to multi-asset funds—which typically maintain some exposure to gold—have also seen sustained inflows exceeding ₹5,000 crore, compared to around ₹2,000 crore just six months ago.
“Unsurprisingly, both gold and silver have outperformed Indian equities over the past year, so the shift in allocation patterns is broadly in line with expectations,” noted Akhil Chaturvedi, Executive Director and Chief Business Officer, Motilal Oswal Asset Management Company.
With such massive inflows, gold has also seized leadership within the passive investing space.
“This signals that investors are layering insurance rather than abandoning equity beta. AUM math in September already showed a sharp step-up in gold ETF assets, setting the base for October’s milestone,” said Karthick Jonagadla, Founder and CEO of Quantace Research.
The sustained buying in gold ETFs comes despite high prices and huge volatility. Investors continue to allocate to gold not just for its massive bull run during this year but also for its appeal as a safe haven and a portfolio diversifier. Gold prices have seen a massive 55% rise this year.
Lingering geopolitical risks, global market volatility, and uncertainty around the interest-rate trajectory of major central banks have made gold lucrative, highlighted Nehal Meshram, Senior Analyst, Morningstar Investment Research India.
Continuing ETF additions internationally and macro uncertainty kept the global hedge bid intact, reinforcing domestic flows, noted Jonagadla.
Has Gold Evolved from Tactical Bet to Core Allocation?
While global gold prices remained range-bound through the month, domestic investors maintained allocations, viewing the metal as an effective hedge against both inflation and currency fluctuations, noted Meshram.
“The consistent inflows also suggest that investors are using gold tactically to preserve wealth and diversify exposure, particularly as global bond yields remain elevated and equity markets fluctuate,” the Morningstar analyst added.
From an Indian portfolio-construction lens, Jonagadla advised investors to keep an eye on two factors to understand if gold is being used as a core investment or a tactical bet. He said if gold prices keep rising while money continues flowing into ETFs, that’s a sign that both demand and price momentum are reinforcing each other.
Secondly, gold’s share of passive flows holding is materially above trend could also be a sign of investors allocating for the long term. “Both would confirm that the current regime is additive (price + flow), not a zero-sum rotation,” he added.
“With elevated, repeated inflows, rising share within passive, and a ₹1 trillion-plus corpus, gold ETFs in India look firmly embedded as a strategic sleeve in diversified portfolios.”
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.