Gold ETFs see inflows for second consecutive month

Monthly statistics released by Association of Mutual Funds in India (AMFI), reveals that gold ETFs have seen inflows of Rs 88 crore for the month of August 2012 after a net inflow of Rs 95 crore for the month of July 2012. That makes gold ETFs see inflows for two consecutive months, after witnessing outflows in May and June 2012. A point to note is gold ETFs as a category has seen outflows of Rs 35 crore till date in FY2012-2013.

"Renewed interest in gold is an outcome of investors' response to expansionary monetary policies in the developed countries," says a Mumbai based wealth manager. Gold has surpassed Rs 32000 levels per 10 gram. "Investors were selling gold as it neared psychological level of Rs 30,000. But as gold makes a swift movement upwards crossing the level of Rs 30,000, investors are coming back to ride the rally in gold," says Abhishek Gupta, ceo, Moat Wealth Advisors.

While developed countries are busy announcing stimulus, investors are expecting inflationary pressure in the global economy. Gold is a natural hedge on inflation and hence it is in demand again. "Investors should not get carried away due to rise in gold prices and should look at it as portfolio insurance. They should restrict exposure to gold to 10% of their portfolio," adds Gupta.

There are eleven gold ETFs listed on national stock exchange that track gold prices of either one gram of gold or half gram of gold.