Bullion Prices at Record Peaks Drive Surge in Gold and Silver ETFs

While overall equity mutual fund inflows in August moderated amid faltering market returns and heightened geopolitical uncertainty, gold and silver exchange traded funds (ETFs) told a different story. Investors sought refuge in the two precious metals, with gold ETF inflows climbing to a seven-month high and silver ETFs posting their best month since June, according to the latest data from the Association of Mutual Funds in India (AMFI).

Gold ETFs drew ₹2,190 crore in August, the largest monthly haul since January’s ₹3,751 crore. After slipping into outflows in March and April, gold funds rebounded as investors looked for a defensive allocation against global uncertainty and steady domestic bullion prices.

Silver ETFs attracted ₹1,759 crore, their strongest inflows since May. Excluding silver, other ETFs recorded inflows of about ₹5,485 crore, reflecting a rebound from the weaker flows seen earlier in the year and signalling renewed interest in passive equity strategies.

The rally in the underlying commodities gave flows an added lift. On the Multi Commodity Exchange (MCX), gold rose about 5% in August, touching a monthly high of ₹1,01,967 per 10 grams. Silver gained roughly 9% for the month, peaking at ₹1,17,468 per kg. Year-on-year, gold is up about 35–40% and silver around 40–45%, placing both metals near record levels.

Analysts also pointed that the strength in silver reflected not only its safe-haven appeal but also robust industrial drivers. A report by Motilal Oswal Financial Services highlighted geopolitical tensions, tariff uncertainty and a weaker dollar as key factors, alongside rising demand from solar panels, electric vehicles and 5G equipment. Supply tightness and over 3,000 tonnes of domestic silver imports in the first half of 2025 have further reinforced sentiment.

Market experts say the surge in ETF flows reflects both performance-driven interest and a shift towards diversification. According to Anand Vardarajan, Chief Business Officer at Tata Asset Management, “Gold has seen a surge in market interest, with inflows reaching ₹2,200 crore in August, making it one of the highest inflow months in recent history. Precious metals continue to attract investor attention, driven by strong recent performance.”

Some fund managers also equated the surge in inflows for gold and silver ETFs with a shift in investor behaviour around profit-taking and fresh allocations.

Suranjana Borthakhur, Head of Distribution and Strategic Alliances at Mirae Asset Investment Managers, mentioned that August’s sharp rise in gold ETF flows was not just about returns. “The traction has been driven by both investors booking profits and those making new allocations, wary that they might miss out,” she said, adding that “overall, flows suggest that investors are taking a more balanced approach, with diversification across equities, hybrids, and gold gaining ground depending on time horizons and risk appetite.”

Others stressed on gold’s enduring role as a portfolio hedge. Hemen Bhatia, Executive Director and Chief Executive of Angel One Asset Management Company, said the August flows highlighted gold’s resilience.

“Gold has once again proven its strength as a value asset and a reliable hedge in volatile markets. These inflows reflect growing investor preference for gold as a portfolio diversifier. With its low correlation to other asset classes, gold continues to enhance stability and risk-adjusted returns for long-term investors,” he explained.

The consistent rise in demand for gold ETFs has nearly doubled the segment’s size over the past year, with assets soaring from ₹37,390 crore in August 2024 to ₹72,496 crore in August 2025, a 93.9% jump. Silver ETFs also swelled, with assets under management going from ₹22,963 crore in July to ₹26,294 crore in August, a growth of ₹3,331 crore supported by both fresh inflows and positive mark-to-market gains.