Growing Popularity of Gold ETFs

About 95 per cent of India's gold demand is in the physical form.

- HIMALI PATEL

Over the past five years, however, holdings in gold exchange-traded funds (ETFs) have surged over 200 per cent—from around 21 to over 63 tonnes—attesting to their growing popularity.

Gaining traction Gold's strong performance—a return of around 32 per cent over the past year—has been a key driver. "The post-pandemic world has been marked with uncertainty on the macroeconomic and geopolitical front. This has kept gold, considered a safe haven in times of risk aversion, relevant. Inflation has been on the higher side, making investors prefer a long-term inflation hedge like gold," says Chintan Haria, principal-investment strategy, ICICI Prudential Mutual Fund.

Volatility in the equity market led to domestic flows going into gold. "It has delivered both stability and returns in recent times," says Niranjan Avasthi, senior vice president, Edelweiss Mutual Fund.