WGC Gold Update shows that Indian gold ETFs saw a sharp reversal in May, mirroring the softer trend seen in global gold ETF flows. Domestic gold ETFs recorded their first monthly net outflow since April 2025: net outflows stood at INR 7.25bn (US$76mn), the largest on record in rupee terms. Gross redemptions also rose to a record INR33.30bn (US$348mn), highlighting the scale of selling during the month. Despite this, overall holdings were broadly steady at 116.5t, in line with our estimates, while total AUM stood at INR1,846bn (US$19.3bn).

Outflows were likely driven by profit-taking following the mid-May import duty hike of 9% that pushed domestic gold prices and the traded price of ETFs sharply higher. INR gold prices rose by around 6% soon after the hike, prompting investors to lock in gains. This was also visible in folio data: investor accounts declined by 134,343 in May, the sharpest monthly fall on record, bringing the total number of active folios to 12.3mn. The high redemptions and reduction in folios suggest that some investors used the price rise to trim or exit their gold ETF positions.

But the outflows appear to have been short-lived. Flows turned positive again in early June, with net inflows of INR 16.31bn (US$171mn) between 1–11 June, suggesting that investor interest in gold ETFs remains strong.

Separately, several fund houses introduced temporary limits on large investments into gold ETFs (with direct subscriptions capped at INR 25cr/~US$2.6mn) and gold ETF fund-of-funds (lump-sum investments capped at INR 10 lakh /~US$10.6k per PAN per calendar month). Although the fund houses have pointed to prevailing market and economic conditions, these measures come amid broader concerns around gold imports, external balances, currency pressures, and the Prime Minister’s appeal to consumers to curtail their gold buying. Given that large investors account for a sizeable proportion of AUM, the cap on investment could limit inflows into fund houses to some extent, although they can continue to buy from the secondary market where authorised participants and market makers continue to operate and provide liquidity.

By investor category, the Association of Mutual Funds of India (AMFI) data shows that as of March’26, corporates accounted for 58% of gold ETF AUM, followed by high-net-worth individuals (HNI) 31%, and retail 11%.