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Gold exchange-traded funds (ETFs) regained investor interest in May after two months of net withdrawals, the Association of Mutual Funds in India (AMFI) data showed on Tuesday. 

Gold ETFs recorded a net inflow of Rs 291.91 crore in May 2025, marking an improvement from the marginal outflow of Rs 5.82 crore in April, according to the AMFI data.

“Flows into the category had remained muted over the past two months, following modest outflows in March as well. The renewed traction in May signals a gradual return of investor interest, likely driven by resilient gold prices and sustained global uncertainties that reinforce gold’s appeal as a strategic hedge,” said Nehal Meshram, Senior Analyst–Manager Research, Morningstar Investment Research India.

The uptick also shows that investors are regaining confidence in gold, as it continues to offer stability amid mixed signals from equity and bond markets.

Furthermore, the relative stability in gold prices through May have provided a more attractive entry point for investors looking to build or rebalance allocations toward safer assets.

The resurgence in flows also highlights the growing role of Gold ETFs in strategic asset allocation, especially as investors seek to manage risk in an increasingly uncertain investment environment.

“While inflows are yet to reach the levels seen earlier in the year, the trend suggests a gradual and measured return of interest in gold, underpinned by its long-term diversification benefits,” said Meshram.

According to Motilal Oswal Private Wealth’s May Alpha Strategist Report, in Q1 2025, the gold market experienced a historic surge, with prices reaching record highs amid escalating geopolitical tensions, tariff wars, and a weakening US dollar. The total supply rose modestly, but the soaring price led to a significant increase in market value.

Investment demand saw a dramatic 170 per cent on-year rise, driven by a strong rebound in gold ETF inflows, particularly in Europe, Asia, and India.