Gold ETFs post seventh straight month of inflows in October

Total flows this year reach Rs 6,341 crore

Gold ETFs saw inflows for the seventh straight month in October, taking total flows this year to Rs 6,341 crore. Flows in October moderated to Rs 384 crore from Rs 597 crore seen in previous month. 

According to experts, gold functions as a strategic asset in an investor’s portfolio, given its ability to act as an effective diversifier, and alleviate losses during tough market conditions and economic downturns. 

"With all major economies struggling to get back on growth trajectory due to the adverse and huge economic impact of coronavirus pandemic, gold, with its safe-haven appeal, has emerged as one of the best performing asset class and a preferred investment destination among investors," said Himanshu Srivastava, Associate Director – Manager Research, Morningstar India. 

Gold prices came off its all-time high recently, after witnessing almost an uninterrupted rally this year. This probably provided a good entry point for investors to invest in yellow metal, said Srivastava.  

The surge in coronavirus cases in several parts of Europe and US and subsequent lockdowns have cast a doubt on the swift recovery of the global economy. 

"Investors continue to hedge their exposure to riskier assets by investing a portion of their assets in gold, as it is seen as a safe haven in times of uncertainty. Considering the threat posed by the coronavirus pandemic to the global economy and the markets, this segment may continue to gain traction from investors," said Srivastava. 

Gold prices in India are up by about 30 per cent this year. As per the World Gold Council, global net inflows of 1,003 tonnes in 2020 have taken gold ETF AUM to an all-time high of 3,880 tonnes or $235 billion as of September.