Gold ETF inflows eclipse mutual funds for first time as prices stay high

Indian investors poured more money into gold exchange-traded funds than equity mutual funds in January, a rare crossover that highlights sustained demand for bullion despite a record-setting surge fueled by geopolitical and monetary risks.

Investors are shifting allocations toward gold against the backdrop of a relatively lacklustre year for equity. (Unsplash)

Net inflows into gold ETFs surged to a record 240.4 billion rupees ($2.65 billion), slightly higher than stock fund inflows of 240.3 billion rupees, according to data released Tuesday by the Association of Mutual Funds in India. The milestone marks one of the strongest monthly endorsements of bullion by local investors in recent years.

The move reflects a wider global pattern. Gold ETF holdings worldwide remain near a more than three-year high, even after a pullback in prices last week, as the drivers behind the blistering rally — including elevated geopolitical risk and waning confidence in sovereign bonds and currencies — remain in place.

In India, these global forces are reinforced by the metal’s deep cultural links and the relative weak performance of local equities compared with regional peers, further supporting inflows.

“Investors are shifting allocations toward gold against the backdrop of a relatively lacklustre year for equity and stellar returns posted by gold in the same period,” said Nirav Karkera, head of research at Fisdom, a wealth management platform. Investment demand for gold will likely stay firm, at least until clarity emerges on the macroeconomic front, he added.

Equity investments, while overtaken by gold in January, remain steady. Stock funds posted inflows for a 59th straight month, as recurring plans keep investors tied to regular investing even as the Nifty 50 Index underperformed its peers in 2025.