Mumbai, February 12 : Indian investors poured a record-breaking ₹3,751.4 crore into gold exchange-traded funds (ETFs) in January, driven by rising global uncertainties, geopolitical tensions, and market volatility. According to data released by the Association of Mutual Funds in India (AMFI) on Wednesday, this marks the highest-ever monthly inflow for gold ETFs, significantly surpassing the ₹640 crore invested in December 2024.
A Remarkable Surge in Gold ETF Investments
The interest in gold ETFs has grown substantially over the past year. Compared to January 2024, when inflows stood at just ₹657 crore, January 2025 saw an astounding 471% increase, reflecting a heightened demand for gold-backed investments.
Apart from increased investments, gold ETFs also delivered strong returns, with an average gain of 7.29% in January. This impressive performance has further reinforced investor confidence in the asset class.
Key Drivers Behind the Gold Rush
The surge in gold ETF inflows can be attributed to several key factors:
• Geopolitical Tensions & Market Volatility: Investors sought refuge in gold as a safe-haven asset, particularly in response to heightened global uncertainties. The ongoing geopolitical unrest and US President Donald Trump’s tariff threats fueled risk aversion in global markets, prompting a shift towards gold investments.
• Anticipation of Interest Rate Cuts: Speculation that major central banks, including the US Federal Reserve, might cut interest rates has made gold even more attractive. Lower interest rates reduce the opportunity cost of holding gold, increasing its appeal as an investment option.
• Inflation Hedge & Portfolio Diversification: With inflationary pressures weighing on economies worldwide, investors turned to gold ETFs to hedge against inflation and diversify their portfolios. Gold has historically been a reliable store of value during economic uncertainty, making it a preferred choice among investors.
Gold Prices Hit Record Highs Before Slight Dip
Gold prices have been on a rollercoaster ride, reaching an all-time high earlier this week before experiencing a slight correction.
• On February 10, gold prices surged to new records in the domestic futures market due to growing concerns over US trade policies. The price of 24-carat gold touched ₹8,537 per gram, while 22-carat gold was priced at ₹8,332 per gram, according to data from the India Bullion and Jewellers Association (IBJA).
• However, on Wednesday, February 12, gold prices dipped following hawkish comments from US Federal Reserve Chair Jerome Powell, who signaled a more cautious approach to interest rate cuts.
• On the Multi Commodity Exchange (MCX), gold futures for April delivery dropped by ₹345 to ₹85,178 per 10 grams.
• In the global market, gold futures declined by 0.18% to $2,892.76 per ounce.
Looking Ahead
With inflation fears, potential interest rate adjustments, and global economic uncertainties persisting, gold is expected to remain a key investment choice in 2025. Analysts believe that gold ETFs will continue to attract significant inflows as investors seek financial security in an unpredictable market environment.
For now, all eyes remain on the US Federal Reserve’s monetary policy decisions and geopolitical developments, both of which will play a crucial role in shaping the future of gold prices and investment trends. ( With inputs from IANS)
