India Gold ETFs Post First Annual Loss

India's Gold ETFs Record First Net Outflow in 12 Months

India's gold exchange-traded funds (ETFs) experienced a net outflow of $61 million in May, marking the first such event in 12 months. This reversal was triggered by a government decision to raise import duties on gold, resulting in higher domestic prices and prompting investors to book profits. The data was released by the World Gold Council.

The sudden change in investor sentiment came against a backdrop of sustained price volatility. Gold prices declined for a third consecutive month in May, falling 1.7 percent after a 1.1 percent drop in April and a steep 11.6 percent fall in March. The import duty announcement had a significant impact on domestic gold prices, creating opportunities for profit-taking.

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Among the major funds, Nippon India ETF Gold BeES bore the brunt of the selling, logging outflows of $110 million. Tata Gold Exchange Traded Fund and Kotak Gold ETF followed, with outflows of $28.24 million and $9.2 million respectively. On the other side of the ledger, HSBC Gold ETF attracted the largest inflows at $61.5 million, while ICICI Prudential Gold iWIN ETF and DSP Gold ETF each pulled in $11 million.

Global Gold ETFs See Modest Outflows as Risk Appetite Returns

The subdued sentiment in India mirrored a broader pullback in global gold ETF demand. Globally physically backed gold ETFs recorded modest net outflows of $2 billion in May, as rangebound prices and a renewed appetite for riskier assets kept investors largely on the sidelines. Despite the monthly blip, year-to-date flows remained firmly positive, with global gold ETFs accumulating nearly $17 billion so far in 2026.

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Net outflows pushed global gold ETF assets under management down 2 percent month-on-month to $604 billion, while collective holdings edged 0.4 percent lower to 4,121 tonnes. The opportunity cost of holding gold also rose during the month, weighed down by dollar strength, elevated interest rates, and recalibrated expectations for the Federal Reserve's rate path.

Inflation concerns tied to the US-Iran conflict added a further layer of uncertainty around the rate outlook, with some market commentators warning that the Fed may need to remain restrictive for longer. Investors who had missed the upside or needed to keep pace with benchmarks appeared to rotate back into risk-on sectors, particularly technology. Global technology ETFs saw their largest monthly inflow since early 2024, underscoring the breadth of the shift.

Europe stood out as the sole region to register inflows, adding $334 million. Positive flows from the United Kingdom and Germany more than offset weakness elsewhere on the continent. In the UK, safe-haven demand was underpinned by political uncertainty and concerns over the government's fiscal position, while a dip in gilt yields in the latter half of the month reduced the opportunity cost of holding gold and encouraged local ETF buying. A similar dynamic played out in Germany, where lower oil prices eased concerns about future European Central Bank tightening, pulling Bund yields lower and supporting demand.

Asian funds recorded their first monthly outflow since August 2025, shedding $1.2 billion. The decline was driven almost entirely by China, where a weaker local gold price, an appreciating renminbi, and sustained investor optimism toward domestic equities weighed heavily on gold ETF demand.