Gold investment trend: India’s gold ETFs hit biggest-ever $10 billion AUM; weaker rupee and global uncertainty fuel demand

India’s physically backed gold exchange-traded funds (ETFs) recorded their biggest-ever monthly inflow in September, pushing total assets under management to a record $10 billion, according to World Gold Council (WGC) data cited by Reuters. The surge came as investors turned to gold amid weak stock market returns and persistent geopolitical uncertainty.Gold ETFs saw inflows of $902 million, equivalent to 7.3 tonnes, in September alone, taking total holdings to an all-time high of 77.3 tonnes. The WGC said the sharp rise was driven by a weaker rupee, volatile equities, and global trade tensions that have boosted demand for safe-haven assets.So far this year, Indian gold ETFs have attracted $2.18 billion in inflows, surpassing all previous annual records. In comparison, inflows stood at $1.28 billion in 2024, $295.3 million in 2023, and just $26.8 million in 2022, Reuters reported.Traditionally, Indian households preferred physical gold in the form of jewellery, coins, and bars, but the ongoing rally has seen urban investors increasingly favour ETFs. The WGC noted that the shift represents a structural change in investment behaviour as investors seek paper gold exposure amid record-high prices.Local gold prices hit a fresh record of Rs 1,22,829 per 10 grams on Wednesday, marking a 60% rise year-to-date after a 21% increase last year. In contrast, the Nifty 50 index has gained only about 6% in 2025, following an 8.8% rise in 2024.“Investors who previously had little or no allocation to gold are now increasing their exposure, putting significant money into the metal and driving inflows into ETFs,” said Vikram Dhawan, head of commodities and fund manager at Nippon India Mutual Fund, which manages the country’s largest gold ETF.Dhawan added that this shift indicates strong structural demand for gold-backed instruments: “Even if gold prices correct, investors are likely to see it as an opportunity to buy more, which could further boost inflows.”However, Reuters noted that the surge in ETF demand and subsequent imports could widen India’s trade deficit and add pressure on the already weakened rupee, even as the rally supports global bullion prices that hit fresh records this week.