India’s gold exchange-traded funds (ETFs) recorded their first net monthly outflow in 1 year in May 2026. The shift came after a sharp rise in domestic gold prices encouraged investors to book profits.
Despite the pullback, overall inflows in 2026 remain elevated. The development reflects short-term investor behaviour amid policy changes and price movements.
Gold ETFs in India saw net outflows of approximately $61 million in May, equivalent to 0.4 tonnes of gold. This reduced total ETF holdings to around 116.3 tonnes, according to World Gold Council data.
The outflow marks a reversal after consistent monthly inflows over the past year. However, cumulative inflows for 2026 still stand at about $3.48 billion, indicating sustained investor interest over the broader period.
The reversal in flows followed a government decision on May 13, 2026, to increase import duties on gold and silver to 15% from 6%. The move aimed to curb imports and reduce pressure on foreign exchange reserves.
As a result, domestic gold prices rose sharply, reaching around ₹1.64 lakh per 10 grams. The increase in prices prompted investors to lock in gains through ETF withdrawals.
A moderation in gold ETF demand may have implications for India’s import dynamics. India imports approximately 800 tonnes of gold annually, making it the world’s 2nd-largest consumer.
A shift towards financial gold instruments such as ETFs can reduce reliance on physical imports over time. This, in turn, may help narrow the trade deficit and support the rupee by easing pressure on foreign exchange reserves.
Amid strong demand and operational considerations, HDFC Mutual Fund has introduced temporary restrictions on its gold investment products. Key measures include:
These measures reflect increased investor activity in gold funds. The restrictions are temporary and aimed at managing fund inflows and operational efficiency.
Read More: Mutual Funds Reduce Exposure to Private Banks in April 2026 Despite Sector Remaining Top Holding.
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India’s gold ETF segment witnessed a short-term outflow in May 2026 following a strong price rally and policy changes. The increase in import duties contributed to higher domestic gold prices, prompting profit booking.
Despite this, overall ETF inflows in 2026 remain significant, reflecting continued investor participation. Structural shifts towards financial gold products may gradually influence import trends, although their share in total demand remains limited.
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.
Investments in the securities market are subject to market risks, read all the related documents carefully before investing.
Published on: Jun 5, 2026, 11:40 AM IST
Akshay Shivalkar
Akshay Shivalkar is a financial content specialist who strategises and creates SEO-optimised content on the stock market, mutual funds, and other investment products. With experience in fintech and mutual funds, he simplifies complex financial concepts to help investors make informed decisions through his writing.
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