Gold ETFs see lack of investors' interest as gold hits new high

The popularity of gold, it seems, is waning among investors. Gold ETFs have seen net outflows of Rs 41 crore in May 2012, according to AMFI. The largest investment in gold for a single month was recorded in September 2011, with net inflows of Rs 988 crore. After that the net inflows in gold ETFs has been coming down.

"Recent redemptions are an outcome of traders booking profit at all-time high prices," says Amar Ranu, senior manager - third party products-research, Motilal Oswal Securities. The traders turn weary as gold prices hit the psychological level of Rs 30,000 for 10 gram. "Traders and investors are considering equity as a more lucrative option than gold," adds Amar Ranu. Equity funds have seen net inflows of Rs 506 crore for May 2012.

The gold ETFs have been riding on the buoyant gold prices in rupee terms. Mumbai standard gold prices have risen by 26.94% over last one year from Rs 23,310 per 10 gram to Rs 29,590 per 10 gram. 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.