The hunger among Indian trade investor for buying gold exchange-traded funds (ETFs) as an investment skill appear to have got over. Amid constant loss for over two years, fresh sales of gold ETFs are almost nil. Continuous weedy pricing, fixed with a negative outlook among strong stock markets, have put investments in gold ETFs off investors’ radar.
In May, there were no sales of gold ETFs, while net outflow was Rs 86 crore, according to the Association of Mutual Funds in India. This has happened for the second time so far this calendar year. The earlier month with no sales was February. Since 2012-13, the resources under management (AUM) of gold ETFs have nearly halved, to Rs 6,650 crore. Closing of investors’ accounts continue. May was the 24th month when the advantage category saw net outflow, as investors kept saving units.
According to Milind Barve, managing director of HDFC Mutual Fund, “The good part is those who had been buying into gold and other physical assets for many years are now concerned in buying financial assets such as equities.” India Ratings & Research, part of the Fitch Group, in its report maintains a negative outlook on domestic gold prices for this financial year. According to it, “In the event of a US (interest) rate hike, total gold prices could drop and range between $ 900 and $ 1,050 per ounce. Domestic prices might decline and range between Rs 20,500 and Rs 24,000 per 10g from the current Rs 27,000.”
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