Gold ETF Demand Stays Strong In February Amid Price Dip

Indian investors continued to allocate money to gold exchange-traded funds (ETFs) in February even as bullion prices corrected during the month. According to data released by the Association of Mutual Funds in India, gold ETFs recorded net inflows of ₹5,255 crore in February.

The previous month, inflows came at a record ₹24,040 crore, when gold ETFs attracted flows comparable to equity mutual funds for the first time.

What Are Gold ETFs And Why Are Investors Buying Them?

Gold ETFs are passive investment instruments that track the price of gold. They enable investors to have an exposure to the precious metal without necessarily having to purchase or store it. The products are also seen as a fairly efficient means of investing in gold in the financial markets.

India currently has around 25 gold ETF schemes, with total assets under management (AUM) reaching ₹1.83 lakh crore as of 28 February 2026. The growth in AUM reflects both fresh investments and gains from earlier increases in gold prices.

How Did Gold Prices And Other Assets Perform?

During February, gold prices in the domestic market declined by about 3.5%. Equity markets also saw mild weakness, with the Nifty 50 falling 0.6% and the BSE Sensex slipping 1.2%.

Compared to the gold ETF, silver ETFs had net outflows of ₹826 crore in February after registering high inflows in January. Despite the outflows, total assets in silver ETFs stood at ₹91,975 crore.

Globally, investors continued to increase allocations to gold ETFs. According to the World Gold Council, February marked the ninth consecutive month of net inflows, adding about $5.3 billion to global funds.

The inflows were dominated by North America, the demand in Asia was positive, and Europe experienced outflows. The total quantity of gold ETFs in the world swelled by 26 tonnes to 4,171 tonnes to reach a record total number of assets under management at $701 billion.

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What Does This Mean For Investors?

The constant inflows into the gold ETFs, even when the prices are on a downward trend, are a sign that there are still investors who view gold as a strategic hedge against market volatility and uncertainties in the macroeconomic environment. Instead of responding to the short-term price volatility, most investors seem to be taking advantage of the falling price in order to add on to their allocations.

To investors, the trend confirms gold as a portfolio stabiliser in equities and other risk assets. Continued interest in gold ETFs is also an indicator of increased preference for financial gold in comparison to physical ownership, which provides liquidity and transparency. In the future, the geopolitical risks, inflation risks and market volatility may remain as the key factors of interest of investors in investment products based on gold.

Sources:

NDTV Profit

Economic Times