Indians Are Buying More Gold: Is Fear The Reason?

The stock market volatilities have boosted the investments in the gold Exchange Traded Funds (ETFs) in India, as the country witnessed its eighth consecutive month of inflows into ETFs in December 2024, the World Gold Council (WGC) stated in its commentary. The trends for gold ETFs reflect rising investor interest in the metal as equity market volatility persisted. 

Gold Prices Trends

The gold price today for 10 grams of 24k gold (99.9 per cent) in Delhi, India is 79,830.00 Indian Rupee . The WGC further highlighted that the pace of inflows has moderated compared to earlier months.

The surge in gold investments can be attributed to a combination of domestic and international factors. A volatile equity market environment coupled with heightened global geopolitical risks steered Indian investors toward gold as a safe-haven asset, the report added. 

Additionally, expectations of further rate cuts by central banks worldwide fueled optimism in the bullion market. Globally, gold ETFs achieved a milestone in 2024, marking their first annual inflow in four years. 

Despite minor declines in collective holdings, total assets under management (AUM) jumped by 26 per cent to a record USD 271 billion, driven by a rocketing gold price and net inflows amounting to USD 3.4 billion. This marked the strongest annual gold price performance since 2010.  

Why Are ETF Inflows Increasing?

Asian markets, including India, played a pivotal role in boosting global gold ETF inflows. Earlier in the previous week, the WGC stated that India's year-to-date purchased 73 tonnes of gold with total gold reserves of 876 tonnes as on November end, making it the second-largest buyer of 2024 after Poland.

The National Bank of Poland (NBP) emerged as the largest buyer of gold in November, increasing its reserves by 21 tonnes to reach a total of 448 tonnes. Gold accounts for nearly 18 per cent of Poland's total reserves, just shy of its 20 per cent target. With year-to-date purchases of 90 tonnes, NBP has maintained its position as the top gold buyer of 2024.

The Central Bank of Uzbekistan also made significant additions, increasing its reserves by 9 tonnes after a hiatus since July.

(ANI Inputs)