Indians are among the top investors in gold exchange-trade funds (ETFs) this year as their bet seems to be proving right with the precious metal gaining over 45 per cent so far in 2025.
Data from the World Gold Council (WGC) show that India is the seventh largest investing nation in gold as of September 26, ahead of developed nations such as Canada, Japan, Australia, Italy and Hong Kong.
India’s investments in gold ETFs are, however, less than four per cent of top investor US and a little more than one-third of Chinese investments.
Current prices
Increasing Indian investments in ETFs come at a time when gold is soaring to new highs on a daily basis over the last couple of weeks. On Tuesday, gold hit a new high of $3,871 an ounce before it pared its gains on profit-booking. At 1930 hours IST, it ruled at $3,824. Gold futures in the US were quoted at $3,854. In India, gold December futures on MCX were up at ₹1,16,377 per 10 gm. In Mumbai spot market, the benchmark, gold closed at ₹1,15,349.
Despite the profit-booking in gold, analysts say the yellow metal’s prices will likely remain volatile. A strong haven demand is supporting gold, keeping the long-term outlook bullish toward $4,000. The rally this week has been fuelled by fears that there may be a US government shutdown, a possibility until late on Tuesday evening in Asia.
The WGC data showed that ETFs’ assets under management (AUM) in the US were $231.5 billion, followed distantly by the UK at $77.5 billion. Switzerland ($43.5 billion), Germany ($40.2 billion), China ($22.9 billion) and France ($9.5 billion) were the countries ahead of India. In India, the gold ETFs AUM was $8.9 billion, the same as that of Canada.
Higher inflows
Inflows into gold ETFs have been $1.35 billion so far this year with the demand increasing by 12.5 per cent. For the current quarter, $371 million have been invested in gold ETFs. In August, India witnessed the fifth largest inflow into gold ETFs at $232.6 million. Overall, physical gold holdings by ETFs in India are 70 tonnes.
WGC data show that soaring gold prices have begun to impact investments in ETFs. Demand as of September 26 was down at 27.2 tonnes with inflows dropping to $3.43 billion compared with $5.51 billion in August. Two-third of the inflows have been from the US at $2.11 billion ($4.10 in August). Investments in Europe dropped more than 50 per cent to $745 million ($1.95 billion). They were, however, positive in Asia rising to $548.2 million compared with an outflow of $495.3 million. Overall, gold holdings this year as of September 26 were up at 3,806 tonnes from 3,691.5 tonnes.
Despite global investors focussing on gold, silver has outperformed the precious metal this year. It has increased by about 60 per cent this year. The white precious metal hit a 14-year high of $47.2 an ounce during early trade on Tuesday before slipping to $46.18 an ounce. In India, it was quoted at ₹1,42,423 a kg in Mumbai. On MCX, December silver futures were $1,41,530 a kg.
Silver prices are rising in sync with gold, but the white precious metal’s physical shortage is projected to continue for the fifth year in a row. Rising demand for solar panels, electric vehicles, and electronics are driving the demand.