Gold ETF inflows jump 71% to ₹4,451 crore in September despite falling gold prices. What drove the surge?
Gold ETFs attracted ₹4,451 crore in net inflows in September 2026, their highest monthly inflow so far in FY2026-27, as investors looked to diversify their portfolios amid geopolitical uncertainty and concerns over inflation. The inflow was up 71% from ₹2,597 crore in August, according to data from the Association of Mutual Funds in India (AMFI).
The increase came even as gold prices corrected during the month, suggesting that investors may have used the dip to increase their exposure to the yellow metal. However, expectations of further price gains may also be influencing investment decisions, raising questions about whether investors are diversifying their portfolios or chasing recent returns.
Adil Chacko, executive director at Anand Rathi Wealth, said geopolitical uncertainty, inflation concerns and gold’s role as a hedge were key factors behind the September inflows.
“With tensions in West Asia and crude oil prices remaining elevated, demand for gold has naturally increased,” Chacko said. He also pointed to a rise of more than 25% in India VIX from its September lows, indicating heightened market uncertainty that can encourage investors to seek hedges.
Gold price correction may have supported inflows
Gold prices corrected by 3.5% in September, according to Chacko, and the decline may have encouraged investors to buy Gold ETFs. However, he said the longer-term trend suggests that investors have also been increasing their exposure to gold while prices were rising.
In January 2026, Gold ETFs recorded inflows of around ₹24,040 crore, their highest monthly inflow in the data cited, when gold prices had already reached nearly ₹1.75 lakh per 10 grams, Chacko said. This suggests that expectations of further price appreciation have also contributed to demand.
“Investors are influenced by gold’s recent strong performance and expect the same trend to continue,” he said, describing this as a form of recency bias.
The September flows therefore reflect more than one factor. Geopolitical concerns and inflation may have strengthened gold’s appeal as a hedge, while expectations of further gains may have encouraged investors to increase their exposure after a strong run in prices.
Gold as a hedge, but equities remain central to long-term portfolios
Strong Gold ETF inflows do not necessarily indicate that investors are abandoning equities. Equity mutual funds attracted ₹38,307 crore in net inflows in September, according to AMFI, suggesting that investors continued to invest in equities while also adding gold to their portfolios.
Chacko said gold can play a role in portfolio diversification, particularly during periods of uncertainty, but investors should avoid getting carried away by its recent performance.
He added that, based on the five-year performance periods since 1990 that he cited, the Nifty 50 had delivered better risk-adjusted returns than gold. He argued that equities should remain the core of a portfolio for long-term wealth creation.
For investors, the surge in Gold ETF inflows is a reminder to distinguish between diversification and return chasing. Gold can help diversify a portfolio, but allocation decisions should depend on an investor’s goals, risk tolerance and existing exposure rather than recent inflows or price performance alone.
