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NEW DELHI: Gold exchange traded funds (ETFs) saw net inflows, for the third successive month in February, worth Rs491 crore. In December and January, gold ETFs received a net inflows of Rs431 crore and Rs624.87 crore, respectively. November saw a net outflows of Rs141 crore.

In calendar year 2020, gold was the best performing asset, delivering a return of over 25%. Gold ETFs saw robust inflows of Rs6,630 crore last year.

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Having touched a peak of Rs55,922 per 10 gram on MCX, gold prices have corrected around 20%, largely because of a rise in the US dollar.

A rise in US benchmark bond yields have also kept gold prices under pressure. The yield on the US 10-year note more than doubled to 1.37% from around 0.6% last year in August.

However, investors are using the correction in yellow metal as an opportunity to lap up units of gold ETFs.

“Gold functions as a strategic asset in an investor’s portfolio, given its ability to act as an effective diversifier, and alleviate losses during tough market conditions and economic downturns. This is where it draws it’s safe-haven appeal...Now with gold prices coming-off its all-time highs touched in August last year has provided a good buying opportunity to investors, which resulted in net inflow for the category in February," said Himanshu Srivastava, associate director – manager research, Morningstar India.

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