Profit booking drives 47% drop in February gold ETF inflows despite all time high prices – The Times of India

Gold prices have reached new report highs, however Gold ETFs skilled a notable slowdown in February, with month-to-month inflows dropping by 47.22% to Rs 1,979 crore, in comparison with Rs 3,751 crore in January.
Despite this decline, the inflows in Gold ETFs have nonetheless seen a 99% 12 months-on-12 months improve, from Rs 997 crore in February 2024. This shift indicators a posh market state of affairs, the place revenue-taking after gold’s value surge and engaging alternatives in the fairness markets are reshaping investor behaviour, in response to an ET report.
“The decline in inflows may be attributed to revenue booking, as gold surged to an all-time high final month, prompting buyers to lock in beneficial properties,” defined Nehal Meshram, Senior Analyst – Supervisor Analysis at Morningstar Funding Analysis India.
“Moreover, fairness market corrections offered engaging shopping for alternatives, main some buyers to shift focus from gold ETFs to equities.” he added.
Gold ETFs nonetheless managed to ship a median return of 3.34% in February, with UTI Gold ETF rising as the highest performer, returning 3.70%. Different ETFs resembling Kotak Gold ETF, Zerodha Gold ETF, and DSP Gold ETF supplied 3.54% returns. Invesco India Gold ETF and Tata Gold ETF returned 3.08% and a pair of.48%, respectively.
Nehal additionally identified that the expectation of potential rate of interest cuts by international central banks has dampened the urgency for protected-haven investments like gold. Despite the decline in inflows, gold continues to be a vital portfolio diversifier, particularly with international financial circumstances remaining unsure. Gold’s position as a hedge in opposition to market instability is anticipated to take care of its enchantment in the approaching months.
The property beneath administration (AUM) for Gold ETFs grew by 7%, reaching Rs 55,677 crore in February, in comparison with Rs 51,839 crore in January. On a yearly foundation, AUM surged almost 95%, up from Rs 28,529 crore in February 2024.
Ajay Garg, CEO of SMC World Securities, added, “The gold ETFs’ web inflows have decreased, however their AAUM grew by 15% to Rs 55,001.75 crore. This rise is because of a pointy rally in gold prices, which may additionally gasoline the investor’s curiosity in gold ETFs in the close to future.”
Based on the newest information from the Affiliation of Mutual Funds in India (AMFI), just one new Gold ETF scheme was launched in February, with Union Gold ETF gathering Rs 11 crore.
(Disclaimer: The opinions, analyses and proposals expressed herein are these of brokerage and don’t mirror the views of The Times of India. At all times seek the advice of with a professional funding advisor or monetary planner earlier than making any funding choices.)