First withdrawal of gold ETFs since March 2023 occurs at Rs 396 crore due to profit booking.

The data shows that in April, there was a net withdrawal of Rs 396 crore from Gold ETFs, whereas there was an inflow of Rs 373 crore the month before.

Units in gold exchange-traded funds (ETFs) are actual gold, which might be paper or dematerialized.

Due to profit booking, the Gold Exchange Traded Fund (ETF) had a net outflow of Rs 396 crore last month, which is the first drain since March 2023.

Despite the drop, data from the Association of Mutual Funds in India (Amfi) shows that the asset under management (AUM) of gold funds increased by 5% to Rs 32,789 crore at the end of April from Rs 31,224 crore the month before.

The data shows that in April, there was a net withdrawal of Rs 396 crore from Gold ETFs, whereas there was an inflow of Rs 373 crore the month before.

The latest net outflow of Rs 266 crore from this asset type occurred in March 2023.

"Gold has performed quite well in Indian rupees over the last year, although it has underperformed when compared to the performance of stocks. In comparison to the equities asset class, flows in the Gold ETF category have been a little erratic. Nevertheless, despite price increases, the asset class has seen net outflows as a consequence of investors choosing to book some gains in this sector, according to Melvyn Santarita, analyst at Morningstar Investment Research India.

Both the price of gold in US dollars and Indian rupees had recently reached all-time highs. He said that the attraction of gold as a safe haven and hedge against inflation is anticipated to remain given the persistent geopolitical uncertainties and the fact that US inflation is still higher than intended.

Gold ETF inflows were Rs 2,920 crore in 2023, a much larger amount than the Rs 459 crore inflows seen in 2022. Throughout the year, gold's appeal as a shelter and a hedge against inflation increased dramatically.

Due to growing inflation, ensuing interest rate increases, and geopolitical developments, investors sought for a safe refuge in this time-honored investment.

Due to its exceptional performance over the last several years, gold has attracted a lot of attention from investors, as shown by the steady rise in folio numbers.

In the month under review, the folio numbers for gold ETFs increased by more than 1 lakh, from 50.61 lakh in March 2024 to 51.84 lakh. This suggests that investors are becoming more and more inclined to invest in gold-related ETFs.

The CEO of Zerodha Fund House, Vishal Jain, said that "investing in gold ETFs offers unmatched advantages including liquidity, cost-effectiveness, and security,"

A further indication of people's preference for gold in difficult times is the flood of capital into gold exchange-traded funds (ETFs) in 2020, the year the COVID-19 epidemic hit.

An examination conducted for the years 2019 through 2023 reveals that the annual increase in AUM of Gold ETFs has been increasing. During the epidemic, the AUM climbed dramatically from Rs 5,528 crore in December 2019 to Rs 13,819 crore in December 2020.

The AUM was valued at Rs 25,959 crore as of December 2023, a significant growth of 27% from December 2022, 88% from December 2020, and 41% from December 2021.

Gold ETFs are passive investment vehicles based on gold prices that invest in gold bullion with the goal of tracking the domestic physical gold price.

To put it briefly, Gold ETFs are just units that reflect actual gold, which may be paper-based or dematerialized.

Gold ETF units are backed by actual gold that is exceptionally pure, with one unit equaling one gram of gold. They mix the ease of gold investing with the flexibility of stock investing. PTI SP ANU ANU