Indian investors are increasingly turning to gold as a preferred asset class, with January witnessing record-breaking inflows into gold ETFs, even as prices touched historic highs.

According to a report by the World Gold Council (WGC), Indian gold ETFs recorded their ninth consecutive month of net inflows, reaching an unprecedented Rs.240 billion (US$2.5 billion) in January. This marked the third-highest inflow globally, after the US and China. Notably, gold ETF inflows surpassed equity funds for the first time, signalling a shift in investor asset allocation amid subdued domestic equity performance.

The surge in inflows, combined with elevated gold prices, pushed total assets under management (AUM) to Rs.1,842 billion (US$20 billion) by end-January — a more than threefold year-on-year increase. Cumulative holdings across 25 gold ETFs crossed the 100-tonne milestone, with a record 15.5-tonne monthly addition, taking total holdings to 110 tonnes.

The momentum continued into February, with estimated net inflows of Rs.46 billion between 1 and 12 February, adding another 3 tonnes. Gold ETFs now account for 2.3% of the total mutual fund industry AUM, the highest share on record, up from 0.8% a year ago.

Investor participation also strengthened significantly, with 1.2 million new folios added in January, taking total gold ETF accounts to 11.44 million.

Beyond ETFs, broader gold investment demand remains robust. Market feedback suggests consumer demand has stayed resilient despite record-high prices and volatility, particularly after the mid-December to mid-January inauspicious period. Buying has been skewed towards bars, coins and digital gold, supported by strong bullish sentiment and limited expectations of a correction.

Jewellery demand has turned more measured. Consumers are opting for staggered purchases instead of lump-sum buying, even for weddings. While jewellery volumes are estimated to be ~20% lower year-on-year, value growth has risen 25–30%, supported by elevated prices. Exchange of old gold remains high, accounting for 40–70% of transactions in some markets. Liquidation activity remains limited.

Digital gold purchases also surged. Transactions via UPI totalled ₹39 billion (US$432 million) in January — up nearly 90% month-on-month and over fourfold year-on-year. In volume terms, an estimated 2.6 tonnes were purchased, marking a 70% month-on-month increase.

The WGC noted that while ease of transaction and low minimum investment requirements continue to attract retail investors, digital gold remains unregulated, underscoring the need for comprehensive regulatory oversight as investor interest in gold strengthens across formats.

source: WGC