India’s gold exchange-traded funds (ETFs) recorded their first monthly net outflow in more than a year during May 2026, signaling a shift in investor sentiment as risk appetite improved and equity markets regained traction.

Key Highlights

• Gold ETFs recorded ₹725 crore net outflow in May, first monthly withdrawal in over a year.
• Investors booked profits in gold and shifted allocations toward equities amid improving sentiment.

According to data released by the Association of Mutual Funds in India (AMFI), gold ETFs witnessed net outflows of Rs 725.04 crore in May, marking the first monthly withdrawal since April 2025. The reversal comes after a prolonged period of strong inflows driven by soaring gold prices, geopolitical uncertainty, and investors’ search for safe-haven assets.

Gold ETFs had emerged as one of the most sought-after investment categories over the past year as global economic uncertainty and market volatility pushed investors toward defensive assets. The segment experienced robust inflows throughout 2025, with rising bullion prices further strengthening investor interest.

However, the momentum began to moderate earlier this year. After witnessing substantial inflows during the final months of 2025 and the beginning of 2026, investor enthusiasm gradually cooled. Market participants noted that inflows slowed considerably by February before turning negative in May.

The latest outflow trend suggests that investors are increasingly booking profits in gold-backed investment products and reallocating capital toward equities and other risk-oriented assets. Improving sentiment in domestic stock markets and expectations of stronger economic growth have encouraged investors to diversify away from traditional safe-haven investments.

Industry experts believe the outflows do not necessarily indicate a bearish outlook for gold. Instead, they reflect portfolio rebalancing after the precious metal’s strong rally over the past year. Gold prices remain elevated, prompting many investors to lock in gains accumulated during the rally.

Despite the May outflows, gold ETFs continue to hold significant investor assets, supported by long-term demand for diversification and inflation protection. Financial advisers also point out that gold remains an important component of a balanced investment portfolio, particularly during periods of global uncertainty.

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The shift in fund flows highlights changing investor preferences as market conditions evolve. While gold ETFs benefited from heightened caution and economic uncertainty in recent quarters, the return of risk appetite appears to be driving fresh interest in equity markets.

Going forward, fund flow trends into gold ETFs are expected to remain closely linked to movements in global gold prices, interest rate expectations, geopolitical developments, and broader market sentiment. Investors will continue to monitor these factors while balancing exposure between defensive and growth-oriented asset classes.