Gold ETF inflows hit all-time high of Rs 11,646 crore in December, up 211% MoM. What should investors do now?

The inflows in gold ETFs have hit an all-time high of Rs 11,646 crore in December, while witnessing a surge of 211% on a month-on-month basis from an inflow of Rs 3,741 crore in November, according to the monthly data released by the Association of Mutual Funds in India (AMFI).

Higher inflows in the category resulted in a rise of 16% in the net assets under management (AUM) to Rs 1.27 lakh crore in December compared to Rs 1.10 lakh crore in November. On a year-on-year basis, the inflows in the category have gone up by 1719% from an inflow of Rs 640.16 crore in December 2024.

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With gold ETFs seeing record inflows in December, market experts recommend rebalancing the allocation based on the desired asset allocation.

Pallav Agarwal, Certified Financial Planner, Bhava Services LLP, told ETMutualFunds that the kind of momentum gold prices are exhibiting, it is very tough to say if the rally has played out; hence, any investment in GOLD ETFs should be done as per the asset allocation of an investor.

Focus should be on rebalancing the portfolio by adding or reducing the exposure so that the desired asset allocation is reached, Agarwal said.

Having a similar opinion, Shivam Pathak, CFP and Founder of Asset Elixir, told ETMutualFunds that it can still make sense to hold gold, but only if it fits your allocation plan.

Pathak further said that if the investor already owns Gold ETFs, then add only if your gold allocation is below your target and if gold has become larger than planned because of the rally, then the right move is rebalancing-bring it back to target and move the excess into your core allocation.

In the month of December 2025, gold ETFs gave an average return of 2.96%. There were 23 funds in the category, Tata Gold ETF offered the highest return of 3.71% in the said time period. Zerodha Gold ETF gave a return of 3.16% in December.

LIC MF Gold ETF and UTI Gold ETF gave 1.71% and 1.70% returns, respectively, in December.

What allocation to have in gold ETFs at the current levels, or the allocation to have in 2026 and for the first time investors, is the current scenario the right time to invest in gold ETFs?

According to Pathak, gold works best as a 5–10% allocation for most retail investors. First-time investors should not wait for the “perfect correction.” If they want exposure, it can be done by starting small and building gradually through SIP/STP, rather than trying to time the market.

While recommending an allocation of 8-10% for retail investors at the current point of time, Agarwal said that the first time investors may enter gold ETFs in a staggered manner at these levels and invest in lumpsum also on corrections.

In 2025, gold ETFs created buzz as investors moved to gold as a hedge amid uncertainty and equity volatility. Gold ETFs gained popularity because they offer a transparent, liquid way to invest in gold without storage or purity hassles.

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In the calendar year 2025, gold ETFs gave an average return of 71.55%. There were 18 funds in the said time period, of which Tata Gold ETF gave the highest return of 73.18% in the CY25.

Nippon India ETF Gold BeES, the largest fund in the category based on assets managed, gave a return of 72.09% in 2025. Groww Gold ETF gave a return of 70.26% in 2025.

Any stability in the current global uncertainty, along with tapering of geopolitical tensions, may lead to a correction in prices of gold and in history, we have seen very long periods of consolidation and even correction in gold prices, Agarwal said while sharing the key risks investors should watch out for after such strong inflows into gold ETFs.

Whereas Pathak said that after heavy inflows, the risk is that gold becomes crowded and short-term moves can reverse; also, gold is sensitive to real yields and the US dollar. If yields rise or the dollar strengthens, gold can cool off. For Indian investors, USD/INR also matters, and like any ETF, they should keep an eye on tracking difference and liquidity.

There were a total of seven launches in 2025 in the gold ETF category, which together collected Rs 113 crore.

Amid the ongoing US-Venezuela conflict and rising geopolitical uncertainty, investors are increasingly turning to traditional safe havens like gold and silver. The key question is can gold ETFs still protect portfolios if global risks ease in the coming months?

Pathak said that if global risks ease, gold may not deliver strong returns in the short term-it can go sideways but it can still play an important role as a hedge and diversifier. “For 2026, I’ll be watching the same drivers: real yields, USD direction, and central bank + ETF demand,” he added.

Pallav Agarwal said that the gold prices will witness a deep correction after such a strong momentum if global risks ease in the coming months. “In the current scenario, the outlook for Gold ETFs is positive, driven by strong buying by Central Banks and global uncertainty.”

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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