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India's gold ETFs reach record $10 billion AUM with largest-ever September inflow

India's physical-backed gold exchange traded funds (ETFs), which are backed by the metal itself, saw their biggest monthly inflows in September. This pushed assets under management to an all-time high of $10 billion as investors flock to the precious material amid weak stock returns.

Gold imports by India, the second largest consumer of gold, will increase as more money flows into ETFs. This is expected to boost global prices which have reached record levels this week. However, the surge in imports may increase India's trade surplus and put pressure on its weaker rupee.

India has traditionally been dominated by gold jewellery, bars and coins. However, urban investors are increasingly investing in gold ETFs, as the prices continue to rise to new highs.

The World Gold Council (WGC), according to its data, reported that gold ETFs received $902 million in September or 7.3 tonnes, bringing their total holdings up to an all-time high of 77.3 tons.

Inflows into Indian gold ETFs are at a record high of $2.18 billion, exceeding all previous annual figures. In contrast, inflows in 2024 were $1.28billion, $295.3m in 2023 and only $26.8m in 2022.

WGC stated that the rise in gold ETFs is due to a weaker currency and increased investor demand. People were looking for a place to invest when faced with weak domestic stocks, geopolitical uncertainties and trade uncertainty.

Gold prices in the local market, which reached a record high of 122 829 rupees for 10 grams on Wednesday, are up 60% this year, compared to 21% growth last year.

India's benchmark Nifty50 has gained around 6% in 2025, after gaining 8.8% in the previous year.

Vikram Dawan, the head of commodities at Nippon India Mutual Fund which manages India’s largest gold ETF, explained that investors who had previously allocated little or no money to gold, are now increasing their allocation. They are putting significant amounts into gold and driving inflows to ETFs.

Dhawan explained that this shift in allocation could mean that investors will continue to purchase gold even if the price corrects. This would further increase inflows. (Reporting and editing by Sharon Singleton; Rajendra Jadhav)

(source: Reuters)