Gold ETFs Shine in India Amid Stock Market Volatility

In December 2024, India experienced its eighth consecutive month of inflows into gold ETFs due to stock market volatilities. The WGC noted a moderated pace compared to previous months, with global geopolitical risks and anticipated interest rate cuts boosting investor interest. Gold ETFs achieved a milestone with annual inflows.

The stock market's volatility has significantly bolstered investments in gold Exchange Traded Funds (ETFs) in India, marking the eighth consecutive month of inflows as reported by the World Gold Council (WGC) for December 2024. This trend underscores a growing investor interest in gold as a hedge against fluctuating equity markets.

The WGC's commentary notes that while the pace of inflows has slowed compared to earlier months, the surge can be attributed to a mix of domestic and international factors. A volatile equity market environment and escalating global geopolitical tensions have made gold a preferred safe-haven asset for Indian investors.

Additionally, expectations of rate cuts by central banks worldwide are fueling optimism in the gold market. On a global scale, gold ETFs achieved a milestone in 2024, recording their first annual inflow in four years. Despite minor declines in holdings, total assets under management surged by 26% to reach a record USD 271 billion, driven by rising gold prices and net inflows of USD 3.4 billion.

Asian markets, notably India, played a crucial role in boosting global gold ETF inflows. As of November's end, India purchased 73 tonnes of gold, bringing its total reserves to 876 tonnes for the year, making it the second-largest buyer after Poland in 2024.

The National Bank of Poland emerged as the largest gold buyer in November, adding 21 tonnes to reach 448 tonnes in reserves, nearly meeting its target of gold comprising 20% of its total reserves. Uzbekistan's Central Bank also increased its gold reserves by nine tonnes following a hiatus since July.

(With inputs from agencies.)