Gold’s Blockbuster Year
Gold has been the standout asset class in 2025, surging more than 40 percent in domestic markets. Prices hit new records on the Multi Commodity Exchange, with gold reaching above ₹1,01,000 per 10 grams in August. This rally has been driven by a combination of global central bank buying, strong ETF inflows, expectations of multiple US Federal Reserve rate cuts, and persistent geopolitical concerns. According to market experts, gold has once again become the safe haven of choice, offering stability during uncertain times. However, with allocations already at record highs, fresh investments may carry the risk of increased volatility.
Surge in ETF Inflows
The rally in gold prices has fueled a surge in gold ETF investments. August alone saw inflows of ₹2,190 crore, marking the highest monthly inflow since January. After brief outflows in March and April, investors have returned strongly, with year-to-date investments now crossing ₹5,648 crore. Assets under management for gold ETFs nearly doubled in a year, climbing from ₹37,390 crore in August 2024 to an impressive ₹72,496 crore in August 2025. This growth highlights the renewed trust of investors who prefer gold ETFs for their convenience, efficiency, and ability to track gold prices without physical storage costs.
Top Performing Gold ETFs
Several funds have delivered remarkable returns in 2025 while maintaining consistent long-term performance. HDFC Gold ETF returned 38 percent in one year and compounded at 12.69 percent annually over ten years. Axis Gold ETF delivered a similar one-year return of 38 percent and compounded at 12.44 percent over the last decade. ICICI Prudential Gold ETF offered a 38 percent one-year return with a strong 12.59 percent ten-year record. Leading the list, UTI Gold ETF gave nearly 39 percent in one year and compounded at 12.72 percent over the last decade. These funds have not only benefited from this year’s rally but have also demonstrated steady compounding power over longer periods.
Investor Outlook
Global demand for gold remains strong, supported by central banks diversifying reserves and consistent inflows into ETFs. Beyond institutional demand, individual investors are also adding gold through ETFs as an efficient hedge. Jewellery demand has softened in price-sensitive regions, but financial investments in gold continue to rise. Experts recommend that investors looking to add gold ETFs should do so gradually, considering that prices are near record highs. Gradual allocation can help manage the risk of volatility while still securing exposure to the long-term stability that gold traditionally provides.
Final Word
With gold ETFs delivering close to 40 percent returns this year and maintaining impressive long-term records, they continue to be one of the most reliable asset classes in uncertain times. While risks remain due to record-high allocations, their convenience and proven track record make them a strong choice for diversification and wealth preservation.
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