India Gold ETFs Attract Strong June Inflows Even As Global Funds See Withdrawals

Gold exchange-traded funds (ETFs) in India recorded net inflows of about $388 million in June, reversing the outflows seen a month earlier, according to data released by the World Gold Council (WGC). The inflows came even as physically backed gold ETFs globally witnessed heavy withdrawals during the month.

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The latest figures indicate that domestic investors continued to allocate funds to gold after recent price corrections, viewing lower levels in the gold price as an opportunity to increase exposure.

Among Indian schemes, Nippon India ETF Gold BeES received the highest inflows of $158.4 million, followed by SBI ETF Gold, which attracted $81.2 million during June.

Recovery Follows Weak May

The June inflows followed net outflows of $61 million in May. According to the World Gold Council, investors had booked profits after higher import duties pushed domestic gold price levels upward.

Although international gold price movements have remained volatile, Indian investors returned to the segment after the correction, helping domestic ETFs outperform the broader global trend.

The recent change has further demonstrated that retail investors still invest in gold-based financial assets amidst volatility in international gold markets.

Global Gold ETFs Witness Heavy Redemptions

While India recorded fresh inflows, physically backed gold ETFs worldwide reported net outflows of $8.9 billion in June.

North America accounted for the largest withdrawals at $5.5 billion, followed by Asia with $2.3 billion and Europe with $818 million. Global gold ETF assets under management declined 13% to $526 billion, while total holdings fell by 74 tonnes to 4,047 tonnes, according to WGC data.

The World Gold Council attributed the decline to changing investor expectations after comments from the new U.S. Federal Reserve Chair were interpreted as supporting a tighter monetary policy. Rising inflation concerns linked to geopolitical developments also pushed bond yields and the U.S. dollar higher, reducing the appeal of non-yielding assets such as gold.

Regional Trends Differed

ETF outflows in Asia were predominantly driven by China due to strong equities and resulting redirection of investment from the gold-based funds. Japan witnessed ETF outflows as well due to an increase in interest rate by the Bank of Japan, which made bullion less attractive as an asset.

India was an exception as domestic investors increased their exposure despite declines in foreign exposure due to lower gold prices from the previous highs. This data demonstrates opposite trends for India and international market.