NEW DELHI: Trade conflicts, global slowdown and decline in equities have made investors bet big on gold despite the volatility in prices.
Gold exchange-traded funds (ETFs) garnered Rs 44 crore in September, making it the second straight month of inflows after August when ETFs saw record net inflows of Rs 145 crore, as per data from apex mutual fund body AMFI.
It was the first inflow since November last year, when Rs 10 crore was infused in such instruments. Prior to this, gold ETFs had seen a net inflow of Rs 20 crore in October 2016 and before that, an inflow of Rs 5 crore was witnessed in such funds in May 2013.
By end of September, total assets managed by gold ETFs moved up to Rs 5,613 crore.
Meanwhile, holdings by global gold-backed ETFs reached their all-time high levels of 2,808 tonnes, adding 75.2 tonnes in September, according to data from the World Gold Council.
Inflows of $3.9 billion across all regions drove holdings to exceed 2012 levels, when the price of gold was 18 per cent higher.
“Against a backdrop of easy-money monetary policy by global central banks, continued geopolitical uncertainty, including the looming Brexit deadline and tensions in the Middle East – as well as rising turmoil in Congress – global gold demand remained strong through the month,” found the World Gold Council.
Typically, investors see gold as a safe-haven asset.
However, investors of gold ETF do not get delivery of physical gold. Under this instrument, the money is invested in standard gold bullion of 99.5 per cent purity.
The prices of gold ETF is linked to the market. In this, you do not have to pay any making charges while buying.
Analysts said increased inflow into ETFs is a testimony to the slowing pace of economic growth.
AMFI CEO N S Venkatesh believes the rise in gold prices may have got people to think it is good to invest in paper gold rather than the physical metal.
“It is a good sign because we want people to come more into financial savings rather than saving in the physical form,” he added.
Not physical gold
Investors of Gold ETF don’t get delivery of physical gold. Under this instrument, the investor’s money is invested in standard gold bullion of 99.5 per cent purity.