What Caused Gold ETFs to Experience a Sixfold Surge in Inflows in September?
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Synopsis
Gold ETFs have witnessed a dramatic surge in inflows, attributed to geopolitical unrest and economic factors. This article delves into the underlying reasons and the implications for investors. Discover how this trend could shape the market in the upcoming festive season and what strategic moves investors might consider.
Key Takeaways
- Gold ETFs saw a sixfold increase in inflows in September.
- Net inflows reached Rs 8,363.13 crore.
- Net assets under management surged to Rs 90,135.98 crore.
- Geopolitical tensions are driving the demand for gold.
- Investors prefer Gold ETFs for their liquidity and transparency.
New Delhi, Oct 15 (NationPress) Gold ETFs experienced a remarkable sixfold increase in inflows during September, driven by geopolitical tensions, purchases from central banks, and anticipations of US interest rate reductions, according to a report released on Wednesday.
Net inflows rose by an astounding 578.28% to Rs 8,363.13 crore in September 2025, a significant jump from Rs 1,232.99 crore recorded last year, as highlighted in the report by ICRA Analytics.
The net inflow has shown a compound annual growth rate (CAGR) of 69.53% over the past five years, climbing from Rs. 597.26 crore in September 2020, the report indicated.
As of September, the net assets managed by Gold ETFs surged to Rs 90,135.98 crore, nearly doubling from Rs 39,823.50 crore a year earlier, marking a 126.34% increase. Month-over-month, the net AUM rose by 24.33% from Rs 72,495.60 crore in August this year, according to the report.
“Rising geopolitical tensions, global uncertainties, and a dynamic outlook are enhancing the safe-haven appeal of gold,” commented Ashwini Kumar, SVP and Head of Market Data at ICRA Analytics.
Moreover, investors are favoring gold ETFs for their liquidity, transparency, cost-effectiveness, and ease of trading compared to physical gold, he added.
The demand for physical gold has significantly increased across various countries, and this trend is expected to continue, maintaining strong gold prices throughout the festive season and into the near to mid-term, Kumar noted.
Kumar also pointed out that ETFs offer portfolio diversification, protection against inflation, and tax efficiency. He recommended a strategic entry following short-term corrections, such as after Diwali, which could present favorable opportunities for phased investments.
Currently, there are 22 gold ETFs, including four launched in 2025. As of September 30, 2025, these ETFs reported average returns of 50.97% over one year, 30.36% over three years, and 16.93% over five years. The top five funds have a five-year CAGR ranging from 16.95% to 17.23%.
Point of View
It is essential to provide an unbiased perspective on market trends. The recent surge in Gold ETF inflows not only reflects investor sentiment in response to geopolitical tensions but also highlights a broader shift towards safer investment avenues. This trend could have significant implications for market stability and investor behavior in the near future.
NationPress
15/10/2025
Frequently Asked Questions
What factors contributed to the rise in Gold ETF inflows?
The rise in Gold ETF inflows was primarily driven by geopolitical tensions, central bank purchases, and expectations of US interest rate cuts.
How much did Gold ETF inflows increase in September?
Gold ETF inflows increased by 578.28% to Rs 8,363.13 crore in September 2025.
What is the CAGR growth of net inflows over the past five years?
The net inflows have witnessed a CAGR growth of 69.53% over the last five years.
Why are investors choosing Gold ETFs over physical gold?
Gold ETFs are preferred for their liquidity, transparency, cost-effectiveness, and ease of trading compared to physical gold.
What returns have Gold ETFs reported recently?
As of September 30, 2025, Gold ETFs reported average returns of 50.97% over one year.
