Gold ETF Investors Turn Sellers After 13-Month Inflow Streak

Gold exchange-traded funds (ETFs) recorded net outflows of ₹725 crore in May, ending a 13-month run of positive monthly inflows, according to data released by the Association of Mutual Funds in India (AMFI). The move comes after a steady moderation in investor allocations to gold-backed investment products in the first five months of 2026. 

The category had remained in the positive territory since April 2025, according to AMFI data and industry commentary reported by Livemint. But May saw a reversal with withdrawals exceeding fresh investments.

Invest in Indian Markets and Unlock Future Potential With 5paisa!

Open Account Now

Fresh Investments Slow, Redemptions Rise

Investor demand weakened considerably during the month. Gross inflows into Gold ETFs fell to ₹2,604 crore in May from ₹5,093 crore in April. At the same time, redemptions increased to ₹3,329 crore compared with ₹2,053 crore in the previous month, resulting in a net outflow.

The reversal follows a steady decline in monthly inflows after a strong start to the year. Gold ETFs had attracted a record ₹24,039 crore in January. Inflows subsequently eased to ₹5,254 crore in February, ₹2,265 crore in March and ₹3,040 crore in April before turning negative in May.

According to Livemint,  Nehal Meshram, Senior Analyst at Morningstar Investment Research India, said that the pace of new allocations had cooled after the sharp inflows witnessed earlier in the year. She noted that profit booking following the rally in gold prices and a shift in investor preference towards risk-oriented assets contributed to the decline in flows.

Meshram also pointed to relatively attractive fixed-income yields, which may have reduced the appeal of holding gold for some investors.

Assets Under Management Continue To Climb

Despite the net outflow, the total assets managed by Gold ETFs increased during the month. AMFI data showed Gold ETF assets under management rising to ₹1.85 lakh crore at the end of May from ₹1.78 lakh crore in April. The increase of about ₹6,460 crore came even as investors withdrew money from the category.

The rise in assets indicates that gains in gold prices during the period offset the impact of redemptions and lifted the value of existing holdings.

Investor Participation Declines

The number of investor folios also moved lower during May. Gold ETF folios fell to 1.23 crore from 1.25 crore a month earlier, reflecting a decline of 1.34 lakh accounts. The reduction suggests that some investors exited the category rather than merely trimming exposure.

The moderation in Gold ETF flows coincided with softer participation across mutual fund categories. AMFI data showed net inflows into actively managed equity mutual funds fell to ₹22,907 crore in May from ₹38,440 crore in April, indicating a broader cooling in investment activity across segments of the mutual fund industry.