Gold has long been regarded as a safe haven asset, particularly during times of economic uncertainty and geopolitical tensions. In April 2025, despite gold prices remaining close to all-time highs, Gold Exchange Traded Funds (ETFs) saw a modest net outflow of ₹5.82 crore.
This marks an improvement from the more significant outflow of ₹77.21 crore witnessed in March. This blog explores the latest developments in the Gold ETF market, shedding light on the reasons behind the fluctuations in investor flows and the significant rise in the assets under management (AUM) of these funds.
Read More: How to Invest in Gold ETF - Tips on Investing.
In April, the outflow from Gold ETFs decreased substantially from the previous month, indicating a shift in investor sentiment. March 2025 saw a sharp outflow of ₹77 crore, the result of profit-booking amid a surge in gold prices. However, April's smaller outflow suggests that many investors may have started returning to the market, albeit cautiously.
The reversal in outflows could indicate that the profit-booking phase, which typically follows a sustained period of rising asset prices, may be tapering off. As a result, investor caution seems to be giving way to a renewed interest in gold ETFs.
One of the key reasons behind the ongoing interest in gold, despite the short-term fluctuations, is its reputation as a hedge against inflation and geopolitical uncertainty. The combination of rising global inflation and persistent geopolitical risks has made gold an attractive asset for investors seeking stability in volatile markets.
Gold ETFs, in particular, offer a convenient way for investors to gain exposure to gold without the need to purchase physical gold.
Although Gold ETFs experienced some outflows in April, the overall assets under management (AUM) saw a remarkable rise. According to data from the Association of Mutual Funds in India (AMFI), Gold ETFs’ AUM rose by 4% month-on-month and by an impressive 87% year-on-year. This growth signals that investors continue to show strong interest in these funds, even if the short-term flows fluctuate.
The rise in AUM indicates that while some investors might be withdrawing, many others are still looking at gold as a long-term investment option. This trend suggests that the overall market sentiment towards gold remains positive, even as it faces periodic corrections and fluctuations in price.
The outflows in March were partly driven by high gold prices and the end-of-financial-year portfolio rebalancing. As gold reached its all-time highs, investors may have seen it as an opportune time to lock in profits. Additionally, many investors likely took advantage of this period to rebalance their portfolios before the end of the financial year, which also contributed to the sharp outflow.
Despite this, the overall interest in gold ETFs has proven resilient. The price of gold remains high, and with rising inflation and geopolitical risks, the demand for gold as an investment vehicle is likely to continue its upward trajectory.
While Gold ETFs experienced a modest outflow in April 2025, the overall assets under management (AUM) have risen significantly, signalling continued investor interest. The improvement in outflows from March to April suggests that the profit-booking phase might be slowing down, and investors are gradually returning to the market.
Despite the fluctuations in short-term flows, the long-term outlook for Gold ETFs remains strong, driven by gold’s role as a hedge against inflation and geopolitical uncertainty. With a significant 87% YoY increase in AUM, Gold ETFs remain a popular choice for investors looking to diversify their portfolios in a turbulent market environment.
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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Mutual Fund investments in the securities market are subject to market risks, read all the related documents carefully before investing.
Published on: May 28, 2025, 7:48 PM IST
Team Angel One
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