Gold exchange-traded funds (ETFs) have further lost favour among Indian investors.
The trend is expected to continue for a couple of months. But that hardly moves investors. Confusion, lack of knowledge and unpredictability are some reasons for gold ETF not pickling up as an investment option in India, market pundits say. The idea of gold ETF was first officially conceptualized by Benchmark Asset Management Company in India when it filed a proposal with the SEBI in May 2002.
Now that the gold exchange traded funds (GETFs) are being sold in the market, let's look at a few things to understand them better.
The total traded value of gold ETF on the NSE stood at a record value of Rs 1,337 crore, while the BSE recorded a turnover of Rs 894.55 crore.
The inflows meant assets under management of gold ETFs climbed by over 4 per cent to Rs 13,503 crore at the end of August from Rs 12,941 crore at July-end.
'People become guided by emotions, fear of missing out, and greed. They tend to invest in booming sectors that may prove exceptionally expensive.' 'Typically, that represents the peak, and subsequently, they lose substantially.'
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This was the second consecutive yearly outflow from such funds.
Investors globally have found solace in gold in the last one year when major world economies slipped into recession. Sample this: According to World Gold Council data, investment by exchange traded funds in gold was 150 tonnes in the third quarter
Gold and silver prices are poised to maintain their record-setting rally in the coming week as investors focus on global inflation data and key macroeconomic indicators that shape central bank policy paths, analysts said.
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They help diversify portfolio and are less risky.
Apart from the emotional value attached to buying gold, the yellow metal offers protection against inflation, interest rate spikes, currency and geopolitical risks, says Anamika Pareek.
This translates into an annual return of 40 per cent, suggests a recent note by the World Gold Council.
In 2013-14, the funds witnessed outflow of Rs 2,293 crore
'For most investors, I recommend a low double-digit allocation (10 to 12 per cent) to gold and silver combined.'
Geopolitical tensions in different parts of the globe and slowdown in global economy led investors to opt for safe-haven like gold over the last one year.
'When markets go into a budget with excessive optimism, the risk of disappointment is higher.'
'AUM reached an all-time high of Rs 79.9 trillion in October 2025, driven by strong retail participation and record SIP inflows of Rs 29,529 crore from over 94.5 million contributing accounts.'
Gold and silver prices are expected to maintain their upward trajectory this week, but may see late profit-booking amid the release of a series of crucial global economic indicators, analysts said. On the economic front, traders will closely monitor the manufacturing/ services PMI data from across regions and the US non-farm payrolls/ employment data along with consumer confidence for the month of September and speeches from several Federal Reserve officials, they added.
'New investors should enter gradually and stay cautious.' 'Silver is a structural multi-year story, but timing matters in a high-volatility metal.'
The State Bank of India said on Monday it would launch a gold exchange traded fund in 2008. "We are examining this product in our mutual fund company and we are hopeful we should be able to come out with an ETF next year," O P Bhatt, SBI chairman said at a conference in Mumbai.
Gold prices dropped by Rs 4,100 to Rs 121,800 per 10 grams in the national capital and slipped below $4,000 an ounce in the global markets on Tuesday as easing US-China trade tensions dampened safe-haven appeal. According to the All India Sarafa Association, the precious metal had closed at Rs 125,900 per 10 grams on Monday.
'...a mix of asset classes.' 'Include equities for growth (across market caps), debt for stability and liquidity, gold as a hedge against macro and currency risk, and global assets for geographical and economic diversification.'
New investors should not allow themselves to fall prey to FOMO and rush headlong into gold.
'Investors' decisions should reflect their financial goals, risk tolerance, and the amount of gold already present in their portfolio.'
As the rally in precious metals takes centre stage in 2025, most analysts recommend a larger allocation to gold over silver despite the latter's outperformance this year. In the current calendar year (CY25), spot gold prices in dollar terms rallied
Silver prices extended their record-breaking rally for a sixth straight session on Monday, surging 6 per cent to touch a lifetime high of Rs 2,54,174 per kilogram in futures trade amid strong investor demand and bullish global trends. On the Multi Commodity Exchange (MCX), silver futures for March delivery surged Rs 14,387, or 6 per cent, to hit a new record of Rs 2,54,174 per kilogram.
Investors must account for currency depreciation in their financial plans and use instruments that can cushion the erosion in purchasing power.
Passive funds appeal to investors seeking to avoid the risk of underperformance by the fund manager and minimise the need for frequent chopping and changing of funds.
Most investors should have a 5% to 10% allocation to gold for diversification. They should stagger their investments to mitigate timing risk.
'If gold's recent surge has increased its allocation beyond 15 per cent in your portfolio, now may be a good time to rebalance.'
Equity mutual funds attracted Rs 29,911 crore in November, marking a 21 per cent increase from the preceding month, according to data released by industry body Amfi on Thursday. This rise in inflows comes after three consecutive months of decline, signalling an improvement in investor sentiment.
According to the report, benchmark gold ETFs have increased to 2.03 tonnes in May from 1.5 tonnes in the corresponding period last year. Whereas gold ETFs at UTI, Reliance Capital and Kotak remained at 1.32 tonnes, 1.23 tonnes and 0.34 tonnes respectively during May period, it said.
Provision to invest in gold deposit schemes introduces credit risk to such funds
Mutual fund industry extended its bull run in 2025, adding a staggering Rs 14 lakh crore to its asset base and pushing total AUM to a record Rs 81 lakh crore by November, powered by surge in retail participation and record SIP inflows. Venkat Chalasani, chief executive officer of AMFI, told PTI that the industry's outlook remains positive, with steady SIP inflows continuing to offset foreign portfolio investor outflows and strengthening market resilience.
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Gold prices are expected to maintain their upward momentum though some consolidation could set in ahead of the US Federal Reserve's policy decision on September 17, analysts said. Traders will focus on the trade inflation data to gauge the impact of tariffs, inflation numbers from major economies including UK and Euro zone, along with monetary policy meetings of Bank of England and Bank of Japan which will provide more guidance for bullion prices, they added.
Move over equity markets, mutual funds and bonds. Investors across India are these days picking up and trading in the latest investment avenue in town: the Gold Exchange Traded Funds.
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