New data from the Association of Mutual Funds in India (AMFI) reveals a significant slowdown in investments into gold exchange-traded funds (ETFs) during October 2026. Net inflows plummeted by nearly 22%, totaling ₹3,474.03 crore compared to ₹4,450.61 crore in September.
This decline in gold ETF inflows coincided with a notable correction in domestic gold prices, with MCX gold falling approximately 7% throughout October. The contrasting performance of silver ETFs, which saw a robust 56.6% increase in inflows to ₹3,092.22 crore, has prompted questions regarding investor sentiment towards the yellow metal.
Despite Dip, Precious Metal Interest Remains
Despite the monthly moderation, gold ETFs continued to attract positive net investments, indicating that investors have not entirely abandoned precious metals. Market experts suggest that while October’s figures show a dip, it doesn't necessarily signal a long-term loss of confidence.
Saugata Chatterjee, President and Deputy CEO of Nippon India Mutual Fund, noted that the increased participation in silver ETFs, even as gold inflows moderated, suggests sustained investor interest in precious metals as a component of diversified portfolios. Suranjana Borthakhur, Head of Distribution and Strategic Alliances at Mirae Asset Investment Managers (India), added that October's gold ETF inflows, despite the 22% month-on-month drop, remained approximately 45% above their six-month average, highlighting relatively strong demand compared to recent historical levels.
Gold Prices and Investor Strategy
The approximately 7% correction in MCX gold prices may have influenced some investors to reassess their allocations. Gold is traditionally seen as a portfolio diversifier, offering a hedge against economic uncertainty and currency volatility. Silver, on the other hand, benefits from both investment and industrial demand, which can lead to more volatile price movements.
Financial planners generally advise viewing precious metals, including gold ETFs, as part of a long-term, diversified investment strategy rather than focusing on short-term price fluctuations. Gold ETFs offer exposure to domestic gold prices without the logistical challenges of storing physical bullion. However, investors should carefully consider factors such as expense ratios, tracking differences, taxation, and market volatility before making investment decisions.
Ultimately, October’s lower gold ETF inflows do not definitively establish a sustained shift away from gold. Investment choices should align with individual financial goals, risk tolerance, and overall asset allocation, rather than being solely based on a single month's fund flow data.