Gold exchange-traded fund (ETF) schemes offered by domestic mutual funds saw net inflows of ₹135 crore in June — down 34 percent month-on-month, a report by Business Standard informed. In comparison, the month of May saw inflows worth ₹203 crore in the gold ETFs.
However, in 2022 so far, April witnessed the highest net inflows in gold ETFs at ₹1,100 crore, added the report. The year began with the gold ETFs witnessing outflows in January and February, as per the report. However, it saw recovery in March, when the inflows came in at ₹205 crore, the report further informed.
"On an average, in the last three months, investors had poured an average of ₹500 crore each month into gold ETFs. Investor folios in gold ETFs rose to 4.6 million in June, compared with 4.5 million in May," the BS report noted.
But, as per experts, sharper inflows into gold were expected in June as the equity markets tumbled. The gold prices declined half percent during the month versus a 5 percent decline in Indian markets. This was the second month that witnessed a fall in gold prices along with a negative equity market performance. In May as well, the gold prices had declined around 2 percent against a 3 percent fall in Indian benchmark indices.
However, the report further pointed out that on a year-to-date basis, domestic gold prices have risen 6 percent, while the Indian markets have declined 9 percent.
“When it comes to gold, the price movement depends on factors like the direction of the US dollar, interest rate, and inflation. Investors are likely to continue to invest in gold ETFs as a means to diversify their portfolios and hold gold ETFs as a hedge against market risks. A lower magnitude of inflows likely arises out of investor expectations of a rising interest-rate scenario, leading to a fall in gold prices,” Kavitha Krishnan, senior analyst manager research, Morningstar India told BS.