Inflows in Gold ETFs surge by 74% to Rs 2,189 crore in August. Here is why

The inflows in Gold ETFs in August surged by 74% to Rs 2,189 crore compared to Rs 1,256 crore in July. On a year-on-year basis, inflows rose 36% from Rs 1,611 crore in August 2024.

An expert said the healthy net inflows reflect gold’s enduring appeal as both a portfolio diversifier and a tactical hedge amid ongoing global macroeconomic uncertainties.

Also Read | Largecap mutual funds see highest jump in monthly inflows by 33% to Rs 2,834 crore in August. Are investors chasing safety?“Gold ETFs witnessed healthy net inflows of Rs 2,190 crore in August 2025, accelerating from Rs 1,256 crore in July and extending the positive streak to four consecutive months. The steady demand reflects gold’s enduring appeal as both a portfolio diversifier and a tactical hedge amid ongoing global macroeconomic uncertainties,” said Nehal Meshram, Senior Analyst – Manager Research, Morningstar Investment Research India.

Another expert believes this recent surge is driven by the strong performance of gold commodity-based funds.

“Gold has seen a surge in market interest, with inflows reaching Rs 2,200 crore in August, making it one of the highest inflow months in recent history. Precious metals continue to attract investor attention, driven by strong recent performance,” said Anand Vardarajan, CBO, Tata Asset Management.For the last four consecutive months, gold ETFs have witnessed positive inflows after seeing outflows in March and April of Rs 77.21 crore and Rs 5.82 crore, respectively.In the current financial year so far, gold ETFs have received total inflows of Rs 5,812 crore, while in the current calendar year, the total stands at Rs 11,466 crore.Also Read | Smallcap mutual funds see 23% drop in monthly inflows to Rs 4,992 crore in Aug. Is investor sentiment shifting?According to Nehal, “Gold ETFs have emerged as a strategic allocation within investor portfolios. Their role in wealth preservation and as a counterbalance to risk assets highlights their growing importance in navigating uncertain markets.”

In the current calendar year, gold ETFs have delivered an average return of 41.61%. Of the 18 gold ETFs during this period, Quantum Gold Fund ETF offered the highest return at around 42.34% in 2025 so far, while Tata Gold ETF delivered the lowest at 41.05%.

Over the past year, gold ETFs have offered an average return of 49.51%. Among the 17 funds with at least one year of existence, ICICI Prudential Gold ETF topped with a return of around 49.90%, while Tata Gold ETF was at the bottom with 48.80%.

“Despite elevated gold prices, investor demand remained steadfast, driven by safe-haven allocations amidst volatile equity markets and persistent geopolitical tensions. Global central bank purchases further bolstered confidence in gold as a reliable store of value,” Nehal said.

“For domestic investors, gold continues to act as a shield against currency fluctuations and inflationary pressures, while also offering tactical positioning ahead of pivotal global monetary policy decisions,” Nehal added.

Also Read | Gold and silver ETFs offer up to 44% return in 2025. Can the rally sustain? The assets under management (AUM) of Gold ETFs rose 7% from Rs 67,634 crore in July to Rs 72,495 crore in August. On a yearly basis, AUM almost doubled, rising 94% from Rs 37,390 crore in August 2024.

According to the latest data from the Association of Mutual Funds in India (AMFI), no new gold ETF was launched in August.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)