Gold exchange-traded funds (ETFs) continued to shine in August 2025, attracting net inflows of Rs 2,190 crore, up sharply from Rs 1,256 crore in July, according to data from the Association of Mutual Funds in India (AMFI). This marked the fourth consecutive month of positive flows, underscoring investors’ preference for the yellow metal amid macroeconomic uncertainties.
Market analysts said the steady demand shows that gold is being increasingly used as both a portfolio diversifier and a tactical hedge, particularly as global markets remain volatile. Elevated gold prices have not deterred inflows, thanks to safe-haven allocations, persistent geopolitical tensions, and continued central bank buying across the world.
Gold ETFs have generated an average return of 40.10% so far in 2025, with some funds delivering gains of up to 41% during the same period. While cumulative investments in gold ETFs in India have crossed ₹5,648 crore, reflecting their growing importance for domestic investors as a shield against currency fluctuations and inflation.
Industry voices point out that this momentum also ties into broader portfolio diversification. Investors are increasingly allocating across equities, hybrid funds, and gold, depending on their risk appetite and investment horizon.
Nehal Meshram, Senior Analyst – Manager Research at Morningstar Investment Research India, said the sustained inflows highlight gold’s dual role as a portfolio diversifier and a tactical hedge against global economic uncertainty.
Suranjana Borthakhur, Head of Distribution & Strategic Alliances at Mirae Asset Investment Managers (India), added that the rise in gold ETF investments reflects a broader diversification trend, with investors balancing allocations across equities, hybrid funds, and gold based on their risk appetite and investment horizon.
What a Rs 10 lakh gold ETF investment looks like
The appeal of gold ETFs is evident in the returns they have delivered. A ₹10 lakh investment one year ago would have grown significantly, given gold’s nearly 38% rally.
HDFC Gold ETF (38.01% return, NAV ₹86.48): Now worth ~₹13.8 lakh
Axis Gold ETF (38.05% return, NAV ₹84.35): Now worth ~₹13.8 lakh
ICICI Prudential Gold ETF (38.06% return, NAV ₹86.59): Now worth ~₹13.8 lakh
UTI Gold ETF (38.73% return, NAV ₹86.59): Now worth ~₹13.87 lakh
This demonstrates gold’s consistent role as an inflation hedge and store of value, even when other asset classes struggle.
Global trends mirror India
The World Gold Council (WGC) reported that global gold ETFs also recorded inflows for the third consecutive month in August. Worldwide, the segment attracted $5.5 billion, pushing total AUM to a new record of $407 billion. Holdings increased by 53 tonnes to 3,692 tonnes, the highest since July 2022.
However, flows were uneven across regions. While North American and European funds led inflows, Asia saw outflows of $495 million, largely from China. Strong equity performance there, with the CSI300 index surging 10% in August, diverted local investors away from gold.
Spot gold prices ended the week at $3,592.50 an ounce, after nearly touching a record $3,600. In Mumbai, spot gold (999 fineness) stood at ₹1,06,340 per 10 gm, while MCX October futures closed at ₹1,07,740. Year-to-date, gold has gained nearly 45%, making it one of the best-performing assets globally.
Despite a 9% dip in ETF trading volumes in August, over-the-counter (OTC) gold trading rose to $171 billion a day, 12% higher than July.
With the year-to-date global inflows of $47 billion, the WGC said 2025 has already delivered the second-strongest run on record, after the pandemic-era peak of 2020.