Gold ETFs Continue To Rake In Inflows As Investors’ Hedge Position In Riskier Assets

Even as the Indian indices continued to move upward, Gold ETFs saw remarkable inflow to the tune of Rs. 384 crore for the month of October as per the latest tally from the AMFI, taking the total assets under management (AUM) to Rs. 13969 crore.

Further in the three months to September as investors hedged their positions in risky assets due to the economic risk emanating from Covid 19 pandemic, the investment avenue saw a net inflow of more than Rs. 2400 crore.

Gold ETFs Continue To Rake In Inflows As Investors’ Hedge Position In Riskier Assets

Gold ETF inflow/ outflow since January 2020

Month	Net inflow or outflow during the month
January	Rs. 202 crore
February	Rs. 1483 crore
March	- Rs. 195 crore
April	Rs. 731 crore
May	Rs. 815 crore
June	Rs. 494 crore
July	Rs. 921 crore
August	Rs. 908 crore
September	Rs. 597 crore
October	Rs. 384 crore

Investment in gold ETFs, a passive investment option, has been gaining momentum in India because of its attractiveness in comparison to physical gold if buying gold for investment reasons.

Ever since early August when gold hit record highs on the MCX of Rs. 56200 per 10 gm, gold lost momentum but since the last week in the run up to the US Presidential polls and now after the democrat candidate Joe Biden has come to power and dollar has eased, gold is once again shining bright at a price of close to Rs. 52500 per 10 gm.

"Gold prices have seen a stellar rally in 2020, risen nearly 33% since the start of the year. The outbreak of COVID19 created global uncertainties and pushed gold prices upwards. Major central banks - Fed, ECB & BoE have slashed interest rates to an all-time low, diverting investments towards the yellow metal. Currently, the yellow metal is rallying as the government in parts of Europe has imposed lockdown due to the second wave of COVID cases. It threatens to derail the recovery seen till now."

"Clarity on the new US President will pave the way for the latest stimulus package from the US government helping the rally seen in the yellow metal. Back in India, the festive season gold buying is also seen pushing gold prices upwards. Expect gold prices to trade on a strong note till clarity emerges on a vaccine, stimulus package in the US, proper handover of administration in the US, and control on COVID cases in Europe," Nish Bhatt, Founder & CEO, Millwood Kane International said.

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