Indian gold ETFs experienced a significant 55% month-on-month decline in July 2026, with net inflows dropping to ₹1,559 crore compared to ₹3,443 crore in June, according to the Association of Mutual Funds in India (AMFI). Despite this sharp decline, gold ETFs maintained positive inflows for a second consecutive month after witnessing net outflows of ₹725 crore in May. This contrasts sharply with the global ETF recovery that saw net inflows of 23.5 tonnes (US$3 billion) after two months of outflows, as reported by the World Gold Council. The Indian data suggests domestic investors are more cautious than their international counterparts, even as global markets show renewed interest in gold.
Europe emerged as the primary driver of the global ETF recovery, with gold ETFs listed in Europe recording inflows of 17.3 tonnes (US$2 billion) in July, marking the second-strongest month of the year for this region. The World Gold Council recognizes a cyclical pattern where European investors deliberately rebuilt their positions following periods of significant market weakness. Demand was particularly strong in the UK and Switzerland, which together have attracted around US$5 billion since the start of the year. However, the recovery in North America remained extremely subdued with an increase of just 0.3 tonnes (US$71 million), insufficient to significantly reduce the year-to-date deficit. Meanwhile, European equity funds attracted $12.52 billion - the largest weekly inflow since July 8, while Asian funds recorded $8.15 billion in inflows, as reported by Reuters.
China has emerged as a critical market for gold, with Chinese gold ETFs recording fourteen consecutive days of inflows - the longest streak since March. This represents not speculative momentum but consistent structural buying behavior from a price-insensitive market. Physical indicators reinforce this trend, with premiums on the Shanghai Gold Exchange remaining constructive and UK export figures, a proxy for Chinese imports, staying elevated. Commercial banks continue to report steady retail and institutional interest, while official sector buying by the People's Bank of China and other public institutions has persisted through market volatility. China's importance lies in its price-insensitive character, where strategic accumulation for reserve diversification and household wealth protection continues regardless of gold price movements.
Gold and other precious metals funds remained popular for a fourth consecutive week, attracting net inflows of $345 million, according to Reuters data. This sustained interest in precious metals comes amid broader market dynamics where global bond funds attracted $12.27 billion in net purchases, marking their largest weekly net purchase in three weeks. High-yield funds attracted $3.66 billion, the largest weekly inflow in five weeks, while money market funds attracted net inflows of $57.48 billion, ending a three-week run of net outflows. The precious metals sector's continued appeal reflects investor diversification strategies as markets navigate various asset classes.
Central bank buying remains one of the key supports for gold prices, with central banks purchasing 289 tonnes of gold in the second quarter of 2026, representing a 62% increase from the previous year, according to Mirae Asset. Poland, China and the Czech Republic were among the major buyers, while the Reserve Bank of India also added to its gold reserves during the quarter. The World Gold Council's central bank survey showed that 89% of reserve managers expect global gold reserves to rise further, while 45% plan to increase their own gold holdings over the next 12 months.
