Gold ETFs record highest-ever monthly inflow of ₹1,961 crore in October

Gold Exchange Traded Funds (ETFs) experienced a surge in investor interest in October, with net inflows reaching ₹1,961 crore, according to the latest AMFI (Association of Mutual Funds in India) data. This represents a significant increase compared to ₹1,233 crore in September.

The October inflow marks the highest-ever monthly net inflow for the Gold ETF category.

Since January 2020, Gold ETFs have attracted a cumulative net inflow of ₹24,153 crore.

Factors influencing increased gold ETF investments

Himanshu Srivastava, Associate Director – Manager Research at Morningstar Investment Research India, noted that several factors have contributed to the increase in Gold ETF investments.

“Gold continues to be favored by investors, with strong demand seen in October,” Srivastava stated.

Global uncertainties, geopolitical tensions, inflationary pressures, and fluctuations in interest rates have reinforced gold’s position as a stable investment option and a potential hedge against inflation.

This combination of factors has led many investors to consider gold as a safe haven during periods of market instability.

Seasonal demand in India supporting gold investment

In addition to global factors, the festive and wedding seasons in India likely played a role in the recent rise in Gold ETF inflows.

According to Srivastava, the demand for gold typically rises during these periods, and some investors may have sought to capitalise on this expected increase in gold prices by investing in Gold ETFs.

Gold’s established role as a portfolio diversifier has also made it an appealing choice for many investors. As market volatility continues, including gold in a diversified investment portfolio remains a common strategy for managing risk.

Future outlook

Looking ahead, the impact of global economic trends, particularly related to interest rates and the dollar, will be important to watch.

The US Federal Reserve’s recent 75 basis point rate cut and the appreciation of the dollar could influence gold prices in the coming months.

Historically, interest rates have a significant effect on gold’s performance, with rising rates typically reducing gold’s appeal and falling rates supporting price increases.

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