Gold ETFs see 40% dip in inflows: What's the reason?
What's the story
Gold Exchange Traded Funds (ETFs) saw a sharp decline in net inflows during last month. The Association of Mutual Funds in India (AMFI) reported that the inflows stood at ₹1,256 crore, a whopping 40% drop from the impressive ₹2,081 crore recorded in June. Despite this month-on-month fall, July marked the third consecutive month of positive inflows into gold ETFs.
Investor behavior
Gold's role as portfolio diversifier
The sustained inflows into gold ETFs over the last three months highlight a continued investor interest in gold as a portfolio diversifier. This is especially true amid ongoing macroeconomic uncertainties. Nehal Meshram, Senior Analyst at Morningstar Investment Research India, said that despite the slowdown in inflows, gold continues to benefit from central bank buying, and remains a tactical hedge for investors ahead of key economic and policy developments.
Wealth preservation
Year-to-date gold ETF inflow numbers
So far this year, gold ETFs have attracted over ₹9,277 crore in cumulative inflows. This highlights their growing importance as a tool for wealth preservation and risk mitigation amid volatile market conditions.