Gold ETFs attract `31,561 crore in Q4 amid geopolitical tensions

New Delhi: Gold Exchange Traded Funds (ETFs) witnessed an influx of Rs 31,561 crore in the March 2026 quarter, marking an almost six-fold surge compared to the year-ago period, as investors sought the safety of the traditional safe-haven asset amid heightened geopolitical tensions.

On a quarter-on-quarter basis, inflows rose 36 per cent to Rs 23,132 crore.

Additionally, the asset base of gold ETFs, as well as investor accounts, recorded significant growth during the year.

In March alone, the category saw net inflows of Rs 2,266 crore, lower than Rs 5,255 crore in February and Rs 24,040 crore in January.

This took the total inflows to Rs 31,561 crore in the March quarter of 2026, sharply higher than Rs 5,654 crore in the corresponding quarter of 2025, according to data from the Association of Mutual Funds in India (Amfi).

While the pace of inflows has moderated sequentially, investor interest in gold-backed products remained positive. The slower inflows in March likely reflect a combination of normalisation after a very strong start to the year and some moderation in fresh allocations.

“January saw unusually elevated inflows, likely supported by strong risk aversion, portfolio rebalancing, and momentum in gold prices, making subsequent monthly numbers look softer by comparison. Even so, March’s positive flows suggest that gold continues to retain investor interest as a diversification tool amid market uncertainty and macro volatility,” said Nehal Meshram, Senior Analyst, Morningstar Investment Research India.

Umesh Sharma, CIO-Debt, The Wealth Company Mutual Fund, said inflows into gold ETFs moderated in March, lower than levels seen in previous months, likely as relative valuations turned more favourable towards equities compared with gold.

The strong inflows helped in driving the assets under management (AUM) of gold funds nearly three-fold to Rs 1.71 lakh crore by the end of March 2026, from Rs 58,888 crore a year earlier.

Gold, which has delivered strong returns in recent years, has attracted significant investor interest, with the steady rise in folio numbers.

During the year, folio numbers in gold ETFs increased by 54.28 lakh to 1.24 crore in March 2026 from 69.69 lakh in March 2025. This indicates a growing inclination among investors towards funds related to gold.

According to Meshram, Gold ETFs remain appealing because they offer a liquid, transparent, and convenient way to gain exposure to the metal without the frictions of holding physical gold.

“From a broader perspective, Q1 2026 inflows stood at Rs 31,561 crore, indicating that despite the month-on-month slowdown, the category has had a strong quarter overall. The trend suggests that gold continues to be used both as a tactical hedge and as a strategic portfolio allocation,” she added.

Gold ETFs, which aim to track the domestic physical gold price, are passive investment instruments that are based on gold prices and invest in gold bullion.

In short, Gold Exchange Traded Funds are units representing physical gold, which may be in paper or dematerialised form.

One gold ETF unit is equal to 1 gram of gold and is backed by physical gold of very high purity. They combine the flexibility of stock investments and the simplicity of gold investments.