Gold exchange traded funds witnessed a reversal in May as investors pulled money out after a strong rally in prices. Data from the Association of Mutual Funds in India showed net outflows of about ₹725 crore during the month. This followed a record inflow of more than ₹3,000 crore in April, which was driven by safe haven demand.
The withdrawal reflects profit booking by investors who had benefited from the sharp rise in domestic gold prices. Several fund houses also placed restrictions on large investments in gold ETFs. HDFC Mutual Fund capped subscriptions to its gold ETF and gold fund of fund schemes earlier in June. Nippon India, Tata, Axis and Aditya Birla Sun Life Mutual Fund followed with similar limits on selected gold products.
In contrast, silver ETFs attracted strong inflows of about ₹2,133 crore in May. The white metal is gaining attention because of its dual role as an industrial commodity and an investment option. Rising global demand expectations have added to its appeal among investors.
Despite the setback in May, overall demand for gold ETFs remains firm this year. However, the latest trend shows investors are rebalancing portfolios by booking profits in gold and diversifying into silver, which is increasingly seen as a growth linked asset.