Gold ETFs see 6-fold jump in September inflows: What's driving surge?

Gold ETFs saw a remarkable jump in investments this September, driven by rising geopolitical tensions, strong central bank buying, and hopes of a US interest rate cut. Inflows into gold exchange-traded funds (ETFs) surged nearly six times to Rs 8,363.13 crore in September 2025, a sharp rise from Rs 1,232.99 crore in the same month last year, IANS report citing data from ICRA Analytics. 

Festive season boosts gold ETF inflows

This surge in Gold ETFs has been observed just ahead Dhanteras and Diwali, a time when gold demand traditionally peaks in India. During this time of the year, people traditionally buy asset in terms of gold and silver, as it is considered auspicious. Many believe that purchasing these metals brings good luck and prosperity, especially around festivals like Dhanteras and Diwali. 

Gold ETFs are showing a continuous surge from over past five years, recording a compound annual growth rate (CAGR) of Rs 597.26 crore with an up of 69.53 per cent in September 2020.

As per the data of MCX, the yellow metal is currently trading at Rs 1,27,740 per 10 grams with an up of 0.59 per cent. It is its life time high value.   

Insights from experts

According to experts, this bullish movement in the gold prices reflects huge investors demand towards the asset. Rise in the gold ETFs inflow and due to weakening of US dollar value, people shifting towards safe-haven asset amid global uncertainties like yellow and white metal. 

With expectations of US interest rate cuts, central banks also purchasing gold ETFs for security. Gold ETFs saw a sixfold rise in inflows in September due to geopolitical tension, IANS reported. 

As per the reports of ICRA Analytics, gold ETFs net inflow has been increased by 578.28 per cent to Rs 8,363.13 crore in September 2025 during this festive season, up by Rs 1,232.99 crore from last year. Net inflow has witnessed a CAGR growth of 69.53 per cent over last 5 years from Rs. 597.26 crore in September 2020.

The net assets under management for Gold ETFs surged to Rs 90,135.98 crore in September, nearly doubled from  Rs 39,823.50 crore a year earlier, marking a 126.34 per cent increase. On a month-on-month basis, net AUM increased by 24.33 per cent from Rs 72,495 in August this year. 

Ashwini Kumar, SVP and Head Market Data, ICRA Analytics said- “Escalating geopolitical tensions, global uncertainties and overall dynamic outlook seem to be boosting the safe-haven appeal of the bullion, further investors prefer gold ETFs for their liquidity, transparency, cost-effectiveness, and ease of trading over physical gold, he added.

Demand for physical gold

Kumar said – “The demand for physical gold has risen sharply across various countries, and this upward trend is expected to continue, keeping gold prices steady during the festive season and in the near to mid term,” IANS reported. 

According to him, ETFs provide portfolio diversification, inflation protection, and tax efficiency. He recommended strategic entry after short-term corrections, such as post-Diwali, which could offer attractive opportunities for phased investments. Currently, there are 22 gold ETFs, including four launched in 2025. As of September 30, 2025, gold ETFs reported average returns of 50.97 per cent over one year, 30.36 per cent over three years, and 16.93 per cent over five years. The top five funds have a five-year CAGR ranging from 16.95 per cent to 17.23 per cent.