Investors strike a rich vein: Gold ETFs shine under the rally's gilded sky

FEBRUARY'S GOLD NUGGET: ₹2,000 crore inflow, a record-breaking haul

Gold exchange-traded funds (ETFs) saw a dip in demand in February but still pulled in nearly ₹2,000 crore in net inflows, the second-highest monthly tally on record.

 

In January, investments in gold-tracking ETFs had surged to a record ₹3,751 crore, four times the average inflow over the previous year.

 

Gold ETF inflows have climbed steadily over the past year, driven by rising gold prices and a favourable tax change in Budget 2024.

 

Gold was India’s top-performing asset class in 2024, and if the rally holds, investors could see solid returns in 2025 as well. 

 

Gold crossed $3,000 per ounce in the international market for the first time on Friday, as global economic uncertainty and trade war concerns pushed demand higher. In dollar terms, gold has gained 14 per cent since the start of 2024.

 

The equity market’s correction since October may have also steered some flows towards gold.

 

Rising inflows and higher gold prices have nearly doubled the assets under management (AUM) of gold ETFs over the past year. As of February 2025, AUM stood at ₹55,677 crore.

 

ETF inflows are likely to remain strong.

 

“The Indian market is currently demonstrating strong investment interest in gold, and it is expected that central banks and ETF investors will continue to drive demand in 2025,” according to the Motilal Oswal Private Wealth February 2025 Alpha Strategist Report.