Growing Investor Appetite Amid Rising U.S. Interest Rates
Investor interest in gold has been consistently on the rise in the current fiscal year. Amid increasing interest rates in the United States, Gold Exchange Traded Funds (Gold ETFs) in India saw an influx of ₹1,028 crore ($139 million) in August, marking the highest level in 16 months.
Reversing the Selling Trend
According to the Association of Mutual Funds in India (AMFI), this surge has pushed the annual inflow in this category to more than ₹1,400 crore. Prior to this, the Gold ETF segment had observed three consecutive quarters of selling. Investment in the April-June quarter was ₹298 crore, compared to ₹456 crore in July. This new trend marks a significant turnaround for the asset class.
Noteworthy Global Events
The last time a monthly inflow of this scale was observed was in April 2022, owing to the Russia-Ukraine conflict, which had led to investments of ₹1,100 crore in the Gold ETF segment.
What Are Gold ETFs?
Gold ETFs are financial instruments designed to replicate the movements in gold prices. They can be purchased through various financial regulations and sold on different trading platforms. Investors gain a proportional share in a gold reserve, without actually buying or storing physical gold.
Market Trend for Precious Metals
The trend for precious metals continues to rise in domestic and international markets. The price of 10 grams of gold in India is ₹59,162, while the price of silver is ₹72,480 per kilogram. On the international stage, the gold price has climbed to $1,916 per ounce.
Investor Sentiment and Future Outlook
This trend indicates a shift in investor sentiment, favouring gold as a more stable asset amidst economic uncertainties and rising interest rates. It also adds to the growing list of investment options for individuals seeking diversified portfolios.
|August Investment in Gold ETF||₹1,028 crore ($139 million)|
|July Investment in Gold ETF||₹456 crore|
|Annual Inflow||Over ₹1,400 crore|
|10g Gold Price in India||₹59,162|
|1 kg Silver Price in India||₹72,480|
|International Gold Price||$1,916 per ounce|
|Highest Monthly Inflow||₹1,100 crore (April 2022)|