Gold ETFs see strong inflows despite July price drop; silver ETFs post robust comeback

Investor appetite for precious metal exchange-traded funds (ETFs) staged a strong comeback in June, even as gold and silver prices have weakened in July. According to the latest data from the Association of Mutual Funds in India (AMFI), gold ETF inflows surged 575 per cent month-on-month, while silver ETFs witnessed a 300 per cent jump, suggesting investors viewed the recent correction in prices as a buying opportunity.

Gold ETFs attracted net inflows of Rs 3,443 crore in June, reversing the Rs 725 crore outflow recorded in May—the first monthly outflow from the category in nearly a year. Silver ETFs also bounced back sharply, receiving Rs 4,286 crore after four consecutive months of outflows amounting to Rs 3,770 crore.

Price correction fails to dent investor interest

The rebound in fund flows came despite weak returns in June. Gold ETFs delivered an average loss of 8.92 per cent during the month, while silver ETFs declined 14.36 per cent on average.

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Among gold ETFs, Zerodha Gold ETF emerged as the weakest performer, falling around 9.05 per cent, while Nippon India ETF Gold BeES, SBI Gold ETF, Kotak Gold ETF and HDFC Gold ETF also lost nearly 9 per cent each. In the silver ETF category, Zerodha Silver ETF, DSP Silver ETF, SBI Silver ETF and HDFC Silver ETF all posted double-digit declines.

Despite the losses, investors returned to the category in a big way.

Nitin Agrawal, CEO – Mutual Funds at InCred Money, said the reversal highlights that the long-term investment case for gold remains intact. "Gold ETFs saw a meaningful reversal after the significant outflows the category attracted during the last several months, clearly making it visible that the structural case of gold allocation as an overall diversification is still intact," he said.

July sees fresh pressure on gold, silver prices

The positive trend in ETF inflows contrasts with the weakness seen in precious metal prices this month.

On July 10, gold futures on the Multi Commodity Exchange (MCX) fell by more than Rs 700 to around Rs 1,44,600 per 10 grams, while silver edged lower to trade near Rs 2.26 lakh per kilogram.

Globally, spot gold slipped to around $4,118 an ounce, while spot silver traded above $60 an ounce. Precious metals remained volatile as investors tracked geopolitical developments in the Middle East, elevated crude oil prices and expectations of at least one more US Federal Reserve rate hike this year.

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Investors buy the dip

Fund managers believe the June inflows were driven by investors taking advantage of lower prices.

Umesh Sharma, CIO – Debt at The Wealth Company Mutual Fund, said, "Market participants capitalised on tactical entry points, aggressively increasing allocations to domestic Gold ETFs following recent price corrections." He added that while tighter liquidity conditions led to outflows from some debt fund categories, retail investors continued to allocate capital to high-performing equity funds and gold ETFs.

Morningstar Investment Research India echoed the view that the correction created an attractive buying opportunity.

Nehal Meshram, Senior Analyst at Morningstar Investment Research India, said, "As international and domestic gold prices cooled off after the duty-driven rally, investors used the correction as an opportunistic entry point. The sharp surge in inflows reflects continued appetite for long-term portfolio diversification alongside rising geopolitical tensions."

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According to Morningstar, Gold ETFs garnered cumulative net inflows of around Rs 37,319 crore during the first half of CY2026, significantly higher than Rs 8,021 crore in the corresponding period last year. Meshram said this reflects gold's growing role as a strategic portfolio allocation and store of value amid global uncertainty.

Strategic allocation remains strong

Industry participants say the latest data reinforces gold's status as a preferred diversification tool.

Rohit Sarin, Co-Founder of Client Associates, said, "The return of inflows into Gold ETFs highlights that investors continue to value gold as an effective portfolio diversifier amid global uncertainty."

Suranjana Borthakhur, Head – Distribution & Strategic Alliances at Mirae Asset Investment Managers (India), added that the strong rebound in ETF flows indicates investors are increasingly using passive products and gold as strategic portfolio allocation tools rather than tactical trades.

As of June-end, gold ETFs managed assets worth Rs 1.70 lakh crore, while silver ETFs had assets under management of Rs 78,943 crore. The latest inflow data suggests investors continue to accumulate precious metals through ETFs despite short-term price weakness, viewing corrections as opportunities to strengthen long-term portfolios.

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