Gold ETFs Maintain Gains Amid Investment Restrictions

On a day marked by mixed market sentiments, gold exchange-traded funds (ETFs) displayed resilience, achieving modest gains. This positive movement comes even as several mutual fund companies implemented restrictions on new investments in gold-linked funds ahead of the festive season.

Market Performance of Gold ETFs

Around 25 different gold ETFs, including well-known names such as Tata Gold, ICICI Pru Gold, and Nippon Gold, were all trading in the green. The gains recorded for these funds varied from 0.06% to 0.78%. Notably, this uptick in performance occurred despite new investment curbs announced by various fund houses regarding their gold fund-of-funds (FoFs).

Understanding the Restrictions

Sudeep Shah, the head of technical and derivatives research at SBI Securities, clarified that the limitations imposed—taking effect from October 16—are strictly applicable to Gold ETF FoFs. Regular gold ETFs remain unaffected and can continue to attract investments.

Shah explained, “The restrictions on fresh lump-sum investments, new systematic investment plans (SIPs), and SIP step-ups for these FoFs will not hinder existing SIPs. These measures are primarily intended to reduce gold imports and relieve pressure on the Indian rupee rather than indicate a negative outlook on gold pricing.”

Leading Performers in Gold ETFs

As the market closed, the 360 One Gold ETF emerged as the top performer with a 0.78% increase, closely followed by the LIC Gold ETF, which reported a gain of 0.50%. Additional strong performers included Groww Gold ETF and Choice Gold ETF, both up by 0.42%, along with Aditya Birla Gold ETF and BNP Paribas Gold ETF, which rose by 0.38% and 0.39%, respectively.

Investment Trends and Future Outlook

Data from the Association of Mutual Funds in India reveals a significant surge in gold ETF inflows, reaching ₹4,450.61 crore in September—up dramatically from ₹2,596.7 crore in August. This marks a record inflow level not seen in the past seven months. Earlier this year, the inflows peaked at ₹24,039.96 crore in January when gold prices soared to their highest levels.

From January to September 2026, the cumulative net inflows into Gold ETFs have exceeded ₹45,925 crore, surpassing last year’s total of ₹42,961 crore, according to analyst Nehal Meshram from Morningstar.

Industry experts like Nirpendra Yadav, a senior research analyst at Bonanza, suggest that the prevailing outlook for gold remains buoyed by safe-haven demand due to ongoing global economic uncertainties. Yadav emphasizes that the recent subscription restrictions should not be misinterpreted as a sign of weakening investor confidence, as existing gold holdings will continue to respond to shifts in domestic and international gold prices, alongside fluctuations in the rupee-dollar exchange rate.

The restrictions on fresh investments seem to be crafted to curtail demand driven by investment, and alleviate the strain on the rupee in light of rising gold import needs. Yadav noted that high investor demand during the festive season could escalate foreign-exchange demands, necessitating these curbs. The sustained inflow trend into gold ETFs may have also influenced fund houses to enforce such restrictions.

However, these limitations are not indicative of a declining sentiment towards gold. Future gold prices are expected to remain tied to global interest rate forecasts, the performance of the US dollar, geopolitical tensions, and the persistent demand for gold as a safe investment.