Gold ETFs shine on Dhanteras! Net inflow surges to ₹841 crore in October over safe haven appeal

Investors have flocked to Gold Exchange Traded Funds (ETFs), which are considered a safe haven during uncertain times, and have been overwhelmed. 841 crore in October, much higher than 175 crore in the previous month. Apart from the inflows, the asset base of Gold ETFs also rose in the period under review, according to data from the Association of Mutual Funds in India (Amfi).

Meanwhile, pre-Diwali Dhanteras gold and silver buying in India, the world’s largest gold consumer, began on a positive note on Friday on the recovery of consumer demand as gold prices eased.

“With ongoing geopolitical tensions, fears of a continued rise in interest rates in the United States, inflation still higher than expected, and the rate of growth slowing, Gold’s appeal as a safe haven is expected to continue and hedging against inflation,” said Melvyn Santarita, analyst and research manager at Morningstar Investment Advisors India.

In addition, Gold prices have come off all-time highs in recent years, which has provided some buying opportunities, especially after a major rally seen since March of this year, he said.

According to the data, Gold-linked ETFs saw inflows 841 crore last month, compared to Rs 175.3 crore in September. The category recorded 1,028 crore in August, the highest monthly inflow in 16 months, and 456 crore in July.

Before that, Gold ETFs saw inflows on the basis of it 298 crore during the April-June period after three quarters of consecutive outflows. The category has been withdrawn 1,243 crore in the March quarter, 320 crore in the Christmas quarter, and 165 crore in the September quarter.

Óir, with its excellent performance over the past few years, has attracted significant investor interest, and the consistent increase in its folios is testament to the same. Investor accounts in gold ETFs increased by nearly 27,700 folios to 48.34 lakh in October, from 48.06 lakh in the previous month.

This shows that investors are more inclined towards gold related funds. In addition, assets under management of Gold ETFs increased by 10 percent to 26,163 crore in the month under review from Rs 23,800 crore in September.

Gold ETFs are passive investment instruments, which track the physical price of domestic gold, are based on gold prices and invest in gold bullion. In short, Gold ETFs are units that represent physical gold, which may be in paper or dematerialized form.

One Gold ETF unit is equal to 1 gram of gold and is backed by physical gold of very high purity. They combine the flexibility of stock investments with the simplicity of gold investments.

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Updated: 10 November 2023, 09:47 PM IST

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