Gold exchange‑traded funds (ETFs) have gone from being one of the market's hottest trades to witnessing their first monthly outflow in more than a year.
After attracting bumper inflows of ₹1.29 trillion in 2018, gold ETFs witnessed a period of cooling off. Appetite roared back in 2025, as soaring gold and a search for diversification brought investors back in droves. A scramble for the ultimate safe haven drove blockbuster inflows through December and January.
How the tide has turned—by February, the frantic rush had slowed to a crawl, and by May, the momentum vanished. In May, investors cashed out a whopping ₹725.04 crore, the first monthly outflow since April 2025, when a mere ₹5.82 crore trickled out, Association of Mutual Funds in India (Amfi) data showed. As risk appetite returned, many gold investors booked profits and shifted money into equities.
Nitin Agrawal, chief executive officer (CEO), mutual funds, InCred Money, said the outflow is not a bearish signal on the yellow metal, but largely reflects profit booking after the sharp rally in prices. That said, he feels the structural case for a measured gold allocation in retail portfolio remains intact.
Gold prices have slipped around 2% in the last month, while year-to-date gains have moderated to 11%, compared with a sharp 54% return over the past one year.
“Additionally, the rising opportunity cost of holding gold, particularly in an environment of relatively attractive yields in fixed income, may have contributed to the pullback,” said Nehal Meshram, senior analyst at Morningstar Investment Research India.
Suranjana Borthakur, head of distribution & strategic alliances, Mirae Asset Mutual Fund, believes May’s gold ETF outflow was triggered by specific policy interventions, namely an import duty hike and a prime ministerial appeal. This sharply repriced domestic gold, giving retail investors a perfect window to book profits, she explained.
The more important signal may be where that money is going. After a year of chasing gold's rally, investors appear to be redeploying capital into equities.
Swapping gold for stocks
“Investors are also booking profits and deploying these proceeds into equity, as recent market corrections have created attractive entry points,” said Feroze Azeez, Joint CEO, Anand Rathi Wealth.
SAMCO Mutual Fund’s chief executive officer, Viraj Gandhi, said, Indian equity mutual fund inflows remained resilient even as Gold ETF flows turned negative, suggesting investors are selectively redeploying into pure equity as markets recover. Nifty 50 has gained nearly 6% in the past two months.
Globally, however, gold ETFs saw inflows of $6.6 billion in April 2026, with total holdings at 4,137 tonnes - near all-time highs - indicating global institutional appetite for gold remains intact even as domestic retail investors tactically rebalance, Gandhi pointed out.
He said gold net long positions on Comex are well below historically overcrowded levels as of April 2026, suggesting speculative selling. “The limited remaining long positions reduce the risk of further aggressive selling,” Gandhi said.
Next chapter
Gold prices have shot up 54% in the past one year. Prices dropped from over $5,600 per ounce (oz) to approximately $4,330 on Comex. It is not a dead bull market, but a temporary pause in a long-term monetary shift that began in 2008, according to Anindya Banerjee, head of commodity and currency research, Kotak Securities.
He said the cycle won't turn on geopolitics or ETF flows, but on a single metric: the US two-year yield. And that yield is currently hostage to oil prices and the Strait of Hormuz, he said.
“Tactically: if Brent holds above $80/bbl (barrel) into year-end, gold can extend its correction toward $3,500–3,700/oz ( ₹1.20–1.30 lakh per 10 gm on MCX). We would treat that zone as a strategic accumulation range.”
Banerjee has maintained a 2030 target of $10,000/oz.
Feroze Azeez of Anand Rathi Wealth noted that their "#ISoldMyGold" drive encouraged clients and employees to sell 1% of their idle gold to help reduce national imports, unlocking ₹2.14 crore. The logic is simple: gold in a locker earns nothing, making it far more practical to redeploy that capital elsewhere.
According to Borthakur, precious metals should be used as a hedge against volatility not as core investment. “Investors should always have a 10-15% allocation to gold and silver to provide support to their portfolio. Anything more than that can be risky.”
Meshram of Morningstar said over the next 6-12 months, gold ETF flows could be influenced by changes in real yields, central bank policy expectations, currency movements, and the broader macro or geopolitical environment.
Besides, fresh escalation in geopolitical tensions, a reversal in the dollar index, or renewed inflation concerns globally could bring gold ETF inflows back quickly, according to Agrawal of InCred Money.