GOLD ETFs SHINE

GOLD ETFs ATTRACTED ₹14,929 CRORE IN THE FIRST 11 MONTHS OF FY25, MORE THAN DOUBLE THE ₹5,248 CRORE LOGGED IN THE PREVIOUS FINANCIAL YEAR. IS IT A SAFE OPTION?

- BY PAWAN KUMAR NAHAR

IN 1848, JOHN Sutter was building a water-powered sawmill in California when he saw flakes of gold on a streambed. The news spread like wildfire and resulted in the famous Californian gold rush. Though roughly $2 billion worth of gold was mined in the region over the next couple of years, few prospectors made it rich due to the high cost of mining and harsh conditions.

India has been seeing its mini gold rush for the last few years but with a difference—investors here have been making loads of money. Gold has outperformed every other asset class in India over the past year, burnishing its reputation as a storehouse of wealth for investors even as geopolitical tensions and economic worries roil financial markets.

The price of the precious metal surged 33.3% in 12 months to ₹87,447 per 10 grams on March 24, 2025, from ₹65,600 a year ago, eclipsing benchmark equity indices, which rose nearly 6% during the period. The flight to the safety of gold was triggered by Donald Trump's election as US President and his threats to slap punitive tariffs on imports from the country's biggest trading partners, including India, the war in Ukraine and tensions in the Middle East.

A strong American dollar and the rupee's weakness amid a flight of foreign investors—plus purchases by central banks—also enhanced the metal's role as a key part of investor holdings in a country where it has always been prized by households as the best hedge against inflation.

International investment houses, including Goldman Sachs and UBS Group AG, are bullish on gold. Goldman Sachs recently raised its end-2025 forecast for gold price to $3,100 per ounce (28.35 grams), up from $2,890, citing strong central bank demand as a key factor. UBS increased its year-end target to $2,900 per ounce, citing investor sentiment amid macroeconomic uncertainties. It has already crossed the target and was above $3,000 on March 24.

EFFECT ON GOLD ETFs