Gold ETFs Surge Amid Rising Bullion Prices and Market Dynamics

Gold Exchange Traded Funds (ETFs) have seen a notable increase in inflows, particularly spurred by rising gold prices and upcoming Dhanteras festivities. With increased demand due to issues related to physical gold and potential interest rate cuts, investors are advised to consider strategic investments.

Gold Exchange Traded Funds are witnessing a significant surge in investment inflows this year, attributed to rising gold prices ahead of the Dhanteras festival.

According to ICRA Analytics, inflows surged by 88%, with Rs 1,232.99 crore accumulated by September 2024. The price of gold reached a record high of Rs 79,350 per 10 gram in the national capital, driven by sustained purchases by jewellers and stockists, as per the All India Sarafa Association.

The increasing appeal of gold ETFs comes from their liquidity, transparency, and alignment with global prices, especially amidst geopolitical tensions. Moreover, concerns about the storage, purity, and security of physical gold are propelling investor interest towards these funds. ICRA also indicates that potential interest rate cuts by the US Federal Reserve could further enhance the attractiveness of gold ETFs. Historically, these funds have outperformed physical gold, presenting a favorable option for short to medium-term investors considering a 'buy-on-dips' strategy to utilize price corrections.

(With inputs from agencies.)