Key facts
- Gold ETFs experienced their first outflow in over a year in May, amounting to Rs 725 crore.
- Silver ETFs recorded an outflow of Rs 2,133 crore in May, marking the fourth consecutive month of withdrawals.
- Total outflows from silver ETFs over the last four months reached Rs 3,770 crore.
- Gold ETFs had seen substantial inflows earlier in the year, with Rs 3,040 crore in April and Rs 24,040 crore in January.
Gold Exchange Traded Funds (ETFs) experienced their first net outflow in over a year during May, with investors withdrawing Rs 725 crore. This marks a reversal from previous months, including an inflow of Rs 3,040 crore in April and a substantial Rs 24,040 crore in January.
Concurrently, silver ETFs continued to see significant investor redemptions, recording an outflow of Rs 2,133 crore in May. This extends a trend of withdrawals for the fourth consecutive month, bringing the total outflows over this period to Rs 3,770 crore. May's outflow for silver ETFs was the highest within this four-month span.
Analysts attribute the shift in gold ETF flows to a combination of factors, including profit-taking after a recent rally in gold prices and a potential rotation away from safe-haven assets as investor risk appetite increases. The rising opportunity cost of holding gold, especially with attractive yields in fixed income, may also be contributing to the pullback. The nature of earlier allocations is suggested to have been tactical, making them more sensitive to price movements and macroeconomic cues.
Silver ETFs, despite the outflows, delivered an average return of 9.59% in May. Gold ETFs, on the other hand, provided an average return of 4% during the same month. The Assets Under Management (AUM) for gold ETFs stood at Rs 1.84 lakh crore, while silver ETFs had an AUM of Rs 86,216 crore.