India's Gold ETF Inflows Slow for Second Consecutive Month, Extending a 10-Month Drought

Gold ETF Inflows Slow in India, Amid Global Volatility

India's gold exchange-traded funds (ETFs) continued their inflow streak, reaching its tenth consecutive month in March, despite a slowdown in the pace of inflows. The country attracted net inflows of $176.6 million in March, marking a sharp 68 percent decline from the $576 million seen in February.

Gold prices experienced significant volatility during the month, with a decline of 11.6 percent, marking the steepest monthly decline since October 2008. China also recorded inflows during the month, driven by heightened safe-haven demand amid geopolitical risks, falling local equity markets, and a weaker currency.

In contrast, North America recorded sizeable outflows of $13 billion in March, ending a nine-month streak of inflows. This was only the second time in history that North America has experienced at least nine consecutive months of inflows, with the other instances occurring during the Global Financial Crisis and the COVID-19 pandemic.

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According to the World Gold Council, selling pressure persisted throughout the month, marking the largest monthly outflow on record. Selling was driven by broader risk-off conditions, triggered by Operation Epic Fury, which weighed on most asset classes except oil and likely prompted investors to raise liquidity by selling prior winners such as gold.

Commodity Trading Advisors entered mid-March with elevated long positioning and appear to have amplified downside price momentum, forcing weaker hands to capitulate. Opportunity costs rose as the dollar and interest rates moved higher, while rate expectations shifted from potential cuts in 2026 to rates now expected to remain unchanged through September 2027, adding uncertainty and weighing on gold demand.

Germany, Italy, and France led monthly selling. Flows closely tracked gold price movements, with sizeable outflows dominating the second half of March as prices fell, while modest inflows re-emerged toward month-end alongside a price rebound.

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At the same time, inflation concerns linked to geopolitical tensions in the Middle East led the European Central Bank to hold rates steady in March while signalling a willingness to hike if inflation accelerates. Rising inflationary pressures and a more hawkish policy stance pushed regional yields higher, increasing the opportunity cost of holding gold. Meanwhile, the euro's depreciation against the dollar exacerbated losses in FX-hedged products, particularly in Switzerland, further weighing on regional flows.