India Gold ETFs See First Monthly Outflow In A Year After Import Duty Hike Spurs Profit Booking

After twelve straight months of inflows, India's gold exchange-traded funds (ETFs) flipped negative in May. Net outflows for the month came in at $61 million, or about 0.4 metric tonnes, according to World Gold Council figures. Total holdings dropped to 116.3 tonnes by month end.

The trigger was a government decision on 13 May to raise import duties on gold and silver from 6% to 15%. Domestic gold prices shot up to ₹1,64,497 per 10 grams, the highest in over two months. Many investors who had been sitting on gains used the price spike to exit. The bulk of redemptions came in the days following the duty announcement.

This was a big swing from April, when the same funds pulled in $297.2 million. Gold prices had also been under pressure, slipping 1.7% in May after a 1.1% dip in April and an 11.6% fall in March.

Even with the May setback, gold ETFs have gathered $3.48 billion in net inflows since January.

Fund-Level Moves

Not all funds moved in the same direction. Nippon India ETF Gold BeES saw the steepest selling at $110 million. Tata Gold ETF lost $28.24 million and Kotak Gold ETF shed $9.2 million. Several smaller funds saw outflows in the $1 to $6 million range.

On the buying side, HSBC Gold ETF stood out with inflows of $61.5 million. ICICI Prudential Gold iWIN ETF and DSP Gold ETF each added $11 million.

What This Means For India

Fewer gold ETF inflows generally translate to lower physical gold import demand. That matters right now because India's trade deficit has been widening and the rupee has been one of Asia's weakest currencies this year. Less gold buying abroad could take some pressure off both.

What Happened Globally

India was not alone. Global gold ETFs also saw outflows of $2 billion in May. After a strong April, prices went sideways and investors moved back toward riskier assets. Tech stocks were a big beneficiary, global technology ETFs had their best monthly inflow since early 2024.

Even so, global gold ETF inflows for the year remain well in positive territory at nearly $17 billion. Total assets under management fell 2% to $604 billion, while holdings dipped slightly to 4,121 tonnes, just under the record of 4,176 tonnes set in late February.

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North America went negative with $1.1 billion in outflows. A stronger dollar, higher rates and shifting Fed rate expectations all made gold a less appealing hold. Europe bucked the trend, pulling in $334 million. The UK and Germany led the way, helped by falling bond yields and softer inflation prints that reduced the cost of holding gold.

Asia saw its first monthly outflow since August 2025, losing $1.2 billion. China drove most of it, domestic gold prices were softer, the yuan strengthened, and local investors stayed interested in equities instead.

Sources:

Reuters

Moneycontrol