Gold, silver ETF investors pull out record sums as prices correct

Investors withdrew nearly ₹3,000 crore from gold and silver ETFs in May as prices retreated from record highs, triggering profit booking and portfolio reallocation

Gold and silver exchange-traded fund (ETF) investors are cashing out as precious metal prices cool after a sharp rally. Investors pulled nearly ₹3,000 crore from gold and silver ETFs in May, marking the highest-ever combined monthly outflow from the two categories. 

Gold ETFs recorded net outflows of ₹725 crore in May, the highest ever for the category and the first monthly redemption in over a year.  

Gold prices had surged nearly 75 per cent in 2025, before hitting a record high on January 29 this year. Since then, prices have fallen about 17 per cent, prompting investors to lock in gains. Silver has followed a similar pattern, though the correction has been much steeper. Domestic silver prices are currently down nearly 39 per cent from their January peak. 

The sharper decline in silver prices has led to heavier investor withdrawals from silver ETFs. The category witnessed record net outflows of ₹2,133 crore in May, extending its redemption streak to a fourth consecutive month. Investors have withdrawn ₹3,770 crore from silver ETFs over the period. 

The outflows come after nearly six months of strong inflows into gold and silver ETFs. Both net inflows and folio additions had been scaling fresh highs month after month till January 2026, as soaring precious metal prices drew investors into the category. 

“After strong inflows of ₹24,040 crore (into gold ETFs) in January, momentum tapered in subsequent months, indicating a gradual cooling in incremental allocations. The reversal appears to have been driven by a combination of profit booking following the earlier rally in gold prices and a shift in investor risk appetite, with some rotation away from safe-haven assets,” said Nehal Meshram, senior analyst, Morningstar Investment Research India. 

The net folio addition data showed that a lot of investors have been exiting their investments in the two precious metal ETFs. Gold ETFs witnessed a decline in folios for the first time in at least a year, as the accounts shrunk by 134,343 in May. In the case of silver ETFs, the number of accounts have been on the decline for two straight months. The total number of accounts have come down by over 400,000 from the peak of 5.6 million in March 2026. 

“Investors overbought gold and silver on the back of a steady rise in prices six months ago, and the subsequent decline is now causing short-term pain, prompting redemptions from ETFs,” according to Manish Bhandari, chief executive officer (CEO) and portfolio manager, Vallum Capital. 

The outflow from gold ETFs comes after 12 consecutive months of positive inflows, during which, they attracted more than ₹70,000 crore, said Feroze Azeez, joint CEO, Anand Rathi Wealth. “With gold prices touching record highs, government requesting to not purchase, and some AMCs stopping inflows in ETF, investors seem to be taking a more practical view,” he said. 

After a sharp rally, future returns may not look as attractive as they did over the past year, according to him. “Some investors may also be booking profits and reallocating money towards other opportunities, especially equities which are significantly corrected,” Azeez said.