Gold ETFs log inflows for fifth straight month amid pandemic

Net ₹908 cr. invested in gold-linked funds in Aug., but lower than July’s ₹921 cr.

Gold ETFs witnessed an inflow in August, for the fifth month in a row, amid major economies staring at a recession due to the spread of COVID-19 pandemic. Net inflow in gold exchange traded funds, i.e. the ETF category, reached ₹5,356 crore in the January-August period, data with the Association of Mutual Funds in India showed.

A net sum of ₹908 crore was pumped into gold-linked ETFs last month, lower than the net ₹921 crore in July. The inflows meant assets under management (AUM) of gold ETFs climbed by over 4% to ₹13,503 crore at the end of August from ₹12,941 crore at July-end.

Month-wise, investors put in a net ₹202 crore in January, ₹1,483 crore in February, but withdrew ₹195 crore in March on profit-booking.

Inflows resumed in April at ₹731 crore, followed by ₹815 crore in May and ₹494 crore in June. “Gold prices came off their all-time high in August, after witnessing an almost uninterrupted rally this year. This probably provided a good entry point for investors to invest in the yellow metal,” said Himanshu Srivastava, associate director manager research at Morningstar India.

‘Safe haven’

“With all major economies staring at a recession due to the spread of the… pandemic, gold, with its safe-haven appeal, has emerged as one of the best-performing asset classes and a preferred investment destination among investors,” he added.

Given the threat posed by the pandemic to the global economy and markets, he said the segment may continue to see traction with investors.

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