Gold ETFs shine bright: Inflows surge over six-fold in September 2025 amid global tensions, record prices

Gold Exchange Traded Funds (ETFs) have turned out to be the festive season’s biggest winner, as investors flocked to the yellow metal ahead of Dhanteras amid global volatility and record-breaking prices. According to data released by ICRA Analytics, net inflows into Gold ETFs soared 578.28% year-on-year to Rs 8,363.13 crore in September 2025, compared to RS 1,232.99 crore in the same period last year. Over the past five years, Gold ETF inflows have expanded at a compound annual growth rate (CAGR) of 69.53%, underscoring the asset’s growing role as a safe-haven investment.

The surge comes as domestic gold prices crossed Rs 1 lakh per 10 grams for the first time, propelled by a mix of geopolitical tensions, robust central bank buying, and expectations of U.S. rate cuts. With markets on edge over global conflicts and monetary uncertainty, Indian investors increasingly favoured Gold ETFs for their liquidity, transparency, and alignment with international gold prices, ICRA Analytics said.

Unlike physical gold, ETFs offer freedom from storage, purity, and security concerns. “Gold ETFs have become the flavour of the season as they combine convenience with strong returns,” the report observed.

The inflows also witnessed a sharp month-on-month jump of 281.96%, rising from ₹2,189.51 crore in August 2025. Parallelly, net assets under management (AUM) for Gold ETFs jumped 126.34% year-on-year to ₹90,135.98 crore in September 2025, up from Rs 39,823.50 crore a year earlier. On a monthly basis, AUM climbed 24.33% from Rs 72,495.60 crore in August.

Ashwini Kumar, Senior Vice President and Head of Market Data at ICRA Analytics, attributed the surge to the flight toward safety. “Escalating geopolitical tensions, global uncertainties, and dynamic market conditions have enhanced the safe-haven appeal of gold,” he said. “Investors are choosing Gold ETFs for their liquidity, transparency, and cost-effectiveness. Strong returns have further strengthened investor confidence.”

Kumar added that the doubling of AUM within a year reflected renewed optimism in the asset class. “For investors seeking portfolio diversification, inflation protection, and tax-efficient exposure to gold, ETFs remain a compelling option. Strategic entries after short-term corrections, such as post-Diwali, could present attractive phased investment opportunities,” he advised.

According to AMFI data, India currently has 22 Gold ETFs, with four new launches in 2025 alone — a sign of rising institutional participation and investor demand for paper gold.

Performance numbers further validate the trend. As of September 30, 2025, Gold ETFs delivered average one-year returns of 50.97%, three-year returns of 30.36%, and five-year returns of 16.93%. The top-performing funds over five years included LIC MF Gold ETF (17.23%), Quantum Gold Fund (17.09%), and Invesco India Gold ETF (17.00%).

Meanwhile, precious metal ETFs dominated passive fund flows in September. Gold and silver ETFs together accounted for 71.9% of total passive inflows of ₹19,057 crore, reflecting investors’ tilt toward tangible assets amid global market instability. Gold ETFs led the charge, contributing ₹8,363 crore or 43.9% of total passive inflows, while Silver ETFs attracted ₹5,342 crore or 28%, as investors sought portfolio diversification beyond equities and debt instruments.

Overall, the passive fund segment saw a 3.9% month-on-month rise in AUM to ₹12.99 lakh crore, marking the 59th consecutive month of net additions.

Market experts expect gold’s rally to continue through the festive season and possibly into 2026. “With benign interest rates and sustained geopolitical uncertainty, the outlook for gold remains strong. However, investors should stay alert to valuation risks and potential volatility,” Kumar cautioned.