Gold ETFs Under Pressure – Understanding the 47% Inflow Slump in February

Gold prices soared to all-time highs in February, yet investors in Gold ETFs seemed to pull back, leading to a sharp 47.22% drop in inflows. According to the latest data, Gold ETF investments stood at ₹1,979 crore in February 2025, a significant decline from the ₹3,751 crore recorded in January.

January’s Gold Rush vs. February’s Cool-Off

January 2025 saw the highest-ever monthly inflows into Gold ETFs, marking an all-time record. However, February’s pullback is largely attributed to profit booking, as per news reports.

Despite this month-on-month decline, the year-on-year inflows tell a different story. Compared to ₹997 crore in February 2024, inflows jumped by 99% in February 2025, highlighting gold’s growing appeal as an investment option over the past year.

Gold ETFs Performance – Who Led the Pack?

Even with reduced inflows, Gold ETFs delivered solid returns in February 2025, averaging 3.34% across the category. Among the top performers:

• UTI Gold ETF: 3.70% return – February’s best performer.
• Kotak Gold ETF & DSP Gold ETF: 3.54% return.
• Invesco India Gold ETF: 3.08% return.
• Tata Gold ETF: 2.48% return.

Gold ETF AUM Keeps Rising

While inflows dropped, the total assets under management (AUM) for Gold ETFs increased by 7%, rising from ₹51,839 crore in January to ₹55,677 crore in February. Over the past year, AUM has surged by nearly 95%, up from ₹28,529 crore in February 2024.

The average assets under management (AAUM) for Gold ETFs also grew by 15% to ₹55,001.75 crore, fuelled by the continued rally in gold prices. This suggests that despite a temporary slowdown in net investments, investor interest in gold remains strong.

Conclusion

The sharp decline in Gold ETF inflows in February 2025 highlights the dynamic nature of investor behavior in response to market conditions, profit-booking trends, and shifting investment opportunities. While monthly inflows dropped, the year-on-year growth in investments and rising AUM figures suggest sustained interest in gold as an asset class. The performance of Gold ETFs remained strong despite the reduced inflows, reinforcing their role in the broader investment landscape.

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