Gold ETF Inflows Plunge 78% in February Following Record January Investment

Gold ETF Inflows Moderate Sharply in February

₹5,255 crore in gold ETF inflows was recorded in February, a 78% decline from the previous month's record high of ₹24,040 crore. According to the Association of Mutual Funds in India (AMFI), this moderation in gold ETF inflows is largely attributed to a normalization after the unusually strong inflows in January.

Market analysts suggest that January's inflows were driven by start-of-year portfolio allocations, defensive positioning, and record-high gold prices, making February's numbers appear weaker on a sequential basis. The sharp decline in gold prices in India and internationally also contributed to the moderation in gold ETF inflows.

Key Factors Contributing to the Decline

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• Profit-booking after the sharp rally in MCX gold prices, which surged above ₹1.9 lakh per 10 grams earlier in the year
• Investors locking in gains after the early February correction, when gold prices slipped toward ₹1.51–1.60 lakh
• A gradual shift in risk appetite, with equities beginning to regain traction

Investment Perspective

Despite the decline in gold ETF inflows, Nehal Meshram of Morningstar Investment Research India believes that gold's enduring appeal amid heightened market volatility and ongoing geopolitical risks underscores the need to invest in the precious metal. Gold ETFs continue to benefit from their role as portfolio diversifiers, convenience, liquidity, and transparency as a means of gaining exposure to the metal.