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Gold ETFs see ₹725 crore outflow as twin tailwinds fade
Gold ETFs saw a ₹725 crore net outflow in May as falling prices and mutual fund subscription caps reversed a year of record inflows. The twin tailwinds of rising gold and a weakening rupee have narrowed.
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Gold ETFs in India saw a net outflow of about ₹725 crore in May, snapping more than a year of steady investor interest. The number of investor folios also fell between April and May, a sign that holders are selling rather than adding.
The reversal follows a record-breaking 2025-26, when net inflows hit ₹68,868 crore – more than double the total of the previous five fiscal years combined. In January 2026, gold ETF inflows even surpassed equity mutual fund flows for the first time, according to a Mint analysis by Deepa Vasudevan.
Two factors drove the shift.
The first is weaker demand for gold itself. Safe-haven buying dropped after tensions in the Strait of Hormuz eased. Higher import duties cut India's gold imports, and persistent US inflation stoked expectations for year-end rate hikes. That strengthened the dollar, making gold less affordable for major buyers such as India and China.
The second trigger came in early May. Prime Minister Narendra Modi urged people to reduce gold purchases. Soon after, several large mutual funds limited fresh lump-sum subscriptions into their gold ETFs and fund-of-funds that invest in them. The caps were ₹25 crore for large investors and ₹10 lakh per investor per month for smaller buyers. The funds said they wanted to curb high-net-worth and corporate inflows without hurting retail investors or systematic investment plans. Sentiment took a hit anyway.