Gold and silver ETF investors withdrew a combined ₹3,000 crore from both categories in May, marking the highest-ever combined monthly outflow from precious metal ETFs. Gold ETFs recorded net outflows of ₹725 crore in May, the highest ever for the category and the first monthly redemption in over a year, as reported by Business Standard. This marked the first monthly outflow in 13 months, as reported by The Hindu BusinessLine. The outflows ended a streak of positive net inflows that had continued uninterrupted since April 2025. The reversal comes after a prolonged rally in precious metal prices that drove strong inflows through much of 2025 and early 2026, prompting many investors to book profits and shift money into equities as risk appetite returned. The flow moderation was not a unique domestic phenomenon, with the World Gold Council reporting that there were also slight withdrawals from physically backed gold ETFs globally in May, with global gold ETF AUM declining 2% month-on-month to US$604 billion.
Silver ETFs witnessed significantly more severe outflows, with the category recording record net outflows of ₹2,133 crore in May, extending its redemption streak to a fourth consecutive month. According to Business Standard, investors have withdrawn ₹3,770 crore from silver ETFs over the period. The sharper decline in silver prices has led to heavier investor withdrawals, with domestic silver prices currently down nearly 39% from their January peak. This compares to gold prices, which have fallen about 17% since hitting record highs on January 29, 2026. The correction in silver prices has been much steeper than gold's decline, prompting more aggressive profit booking among investors.
The May outflow was driven largely by weaker fresh investments, with gross inflows nearly halving to ₹2,604 crore from ₹5,093 crore in April, while redemptions rose to ₹3,329 crore from ₹2,053 crore. According to Morningstar Investment Research India, the trend suggests that the strong momentum seen at the start of the year gradually faded as investors became more cautious about adding fresh exposure to precious metals. The reversal was attributed to a combination of profit booking after the rally in precious metal prices and a shift in investor risk appetite, with some rotation away from safe-haven assets. As Nehal Meshram, Senior Analyst at Morningstar Investment Research India, noted, "After strong inflows of ₹24,040 crore (into gold ETFs) in January, momentum tapered in subsequent months, indicating a gradual cooling in incremental allocations. The reversal appears to have been driven by a combination of profit booking following the earlier rally in gold prices and a shift in investor risk appetite, with some rotation away from safe-haven assets." Additionally, relatively attractive fixed-income yields may have reduced the appeal of precious metals for some investors.
Despite the net outflow, assets under management (AUM) of Gold ETFs rose to ₹1,84,571 crore at the end of May from ₹1,78,110 crore a month earlier, indicating that gains in gold prices more than offset the outflows. The ₹6,460 crore increase came despite investors withdrawing money from the category, with the entire rise in AUM driven by mark-to-market appreciation rather than fresh investments. Investor participation also weakened during the month, with the number of Gold ETF folios falling to 1.23 crore in May from 1.25 crore in April, a decline of 1,34,343 folios. This suggests that some investors exited the category altogether rather than merely reducing allocations. The trend comes against the backdrop of multiple mutual fund houses, including HDFC Mutual Fund, ICICI Prudential Mutual Fund, Nippon India Mutual Fund, Tata Asset Management, Axis Mutual Fund, and Aditya Birla Sun Life Mutual Fund, introducing temporary restrictions and caps on fresh inflows into gold-linked schemes. Despite the sequential decline, gold ETFs have attracted more than ₹70,000 crore since May 2025 overall.
The more important signal may be where the money is going, as investors appear to be redeploying capital into equities after a year of chasing precious metal rallies. Feroze Azeez, Joint CEO of Anand Rathi Wealth, noted that their "#ISoldMyGold" drive encouraged clients and employees to sell 1% of their idle gold to help reduce national imports, unlocking ₹2.14 crore. "Investors are also booking profits and deploying these proceeds into equity, as recent market corrections have created attractive entry points," Azeez explained. SAMCO Mutual Fund's CEO Viraj Gandhi pointed out that Indian equity mutual fund inflows remained resilient even as Gold ETF flows turned negative, suggesting investors are selectively redeploying into pure equity as markets recover. Nifty 50 has gained nearly 6% in the past two months. Globally, gold ETFs saw inflows of $6.6 billion in April 2026, with total holdings at 4,137 tonnes - near all-time highs - indicating global institutional appetite for gold remains intact even as domestic retail investors tactically rebalance. According to Anindya Banerjee of Kotak Securities, gold prices have shot up 54% in the past year and dropped from over $5,600 per ounce to approximately $4,330 on Comex, but this represents a temporary pause rather than a dead bull market.
