Gold, silver ETFs see sharp rise in inflows in September. Which metal should investors prefer now?

The inflows into gold and silver exchange-traded funds (ETFs) surged in September, even as prices of both precious metals corrected during the month, highlighting growing investor interest amid market uncertainty. However, financial advisors caution that the rise in inflows may reflect short-term tactical decisions and recent performance rather than a lasting shift in portfolio allocation.

Rajesh Minocha, a Certified Financial Planner (CFP), Founder of Financial Radiance shared with ETMutualFunds that the increase appears linked to higher precious metal prices and ongoing political and economic uncertainty and many investors may be choosing ETFs for their ease of inclusion in portfolios.

Minocha further said that this trend reflects more of market timing and some purchases result from portfolio rebalancing, while others follow recent performance. However, brief periods of strong inflows do not indicate a permanent shift.


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Krishanu Choudhary, Director & Unit Head, Anand Rathi Wealth Limited told ETMutualFunds that with geopolitical tensions in West Asia, elevated crude oil prices and inflation concerns, investors have naturally been looking at precious metals as a hedge against uncertainty. India VIX also rose by over 25% from its September lows, reflecting heightened market volatility, which generally encourages investors to increase their exposure to gold, while the correction in gold and silver prices may have further supported inflows.

Choudhary further said that interestingly, equity mutual funds continued to attract strong inflows of Rs 38,307 crore in September. This shows that investors are adding precious metals alongside equities rather than shifting away from them. So, while interest in gold and silver has certainly increased, September's sharp inflows appear more tactical and driven by market uncertainty, rather than a structural shift in investor portfolios.

Nirav Karkera, Head of Research and Fund Manager, W by Groww said that gold continues to draw strong interest, with flows into gold ETFs rising sharply, investors are optimistic about the metal given the state of the global economy, pressure on the rupee and geopolitical tension and it also works as a diversifier at a time when Indian equities are volatile but going nowhere.

According to data released by the Association of Mutual Funds in India (AMFI), gold ETFs attracted net inflows of Rs 4,450.61 crore in September, up 71.4% from Rs 2,596.70 crore in August.

On the other hand, Silver ETF inflows rose 55.4% month-on-month to Rs 1,974.32 crore in September from Rs 1,270.63 crore.

Choudhary said that there are two types of investors. One looks at gold as a hedge against inflation and market uncertainty, while the other is investing with expectations of extraordinary returns, largely influenced by its recent performance.

While mentioning recency bias in the inflow data that January 2026 saw record gold ETF inflows of Rs 24,040 crore when gold prices had already reached nearly Rs 1.75 lakh per 10 grams. In September, despite gold correcting by 2.5% and silver by 4.5%, inflows remained strong. In the case of silver, it is slightly different because it is also an industrial metal, and its prices are influenced by industrial demand and economic activity, Choudhary further said while some investors are genuinely looking for diversification and safety, others are clearly investing in anticipation of further price appreciation.

Minocha said that both factors likely contribute. Investors often buy gold to balance portfolios and protect against uncertainty, while silver’s rise appears driven by momentum and return-seeking. Recent spikes should not be viewed as indicators of future performance.

According to a monthly note on gold and silver by Quant Mutual Fund, precious metals suffered heavy selling pressure in late September. Gold slid 6.45% through the month, touching multi-month lows around $4,110 per ounce. Silver dropped towards $60 per ounce.

The fund house said that the correction was fueled by a strong U.S. Dollar Index (Rose 2.06%), surging Treasury yields close to 5.30% (with the 10-year yield approaching multi-decade highs), and a surprise 25 basis points interest rate hike by the U.S. Federal Reserve—its first rate hike in three years—which heavily dented the appeal of non-yielding assets.

It further said that gold, however, continues to be a strategic asset for global hierarchy. It was reported that China bought over 1,000 tons of Gold in the first eight months of 2026, worth over $150 billion, following on from a purchase of 886 tons in 2025, worth nearly $100 billion.

Should investors invest now or stagger their purchases?

With inflows rising sharply, investors may be tempted to increase their exposure to gold and silver. So the key question is whether investors should invest now at one-go in these previous metals or stagger their purchases?

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Minocha said that at current price levels, consider spreading purchases over time rather than investing all at once, gold should be the primary precious-metal holding because of its diversification benefits and relative stability whereas silver may serve as a smaller allocation given its higher volatility.

He further said that for many long-term portfolios, a gold allocation of 5-10% is sufficient, with silver kept below that level, the optimal allocation depends on the overall portfolio and the investor’s risk tolerance and his preference is to make this allocation through multi-asset allocation funds and let the fund manager determine the commodity proportion.

Choudhary cautioned investors against buying gold or silver simply because of recent returns or rising ETF inflows. He said equities should remain the core holding for long-term wealth creation.

Citing five-year rolling returns since 1990, he noted that the Nifty 50 delivered a higher risk-adjusted return, with a Sharpe ratio of 0.59, compared with 0.41 for gold and 0.27 for silver.

For investors seeking gold exposure, Choudhary said an allocation of up to 10% of the overall portfolio could be considered by reducing the debt allocation. For instance, an 80:20 equity-debt portfolio could be adjusted to 80% equity, 10% debt and 10% gold. He recommended building the allocation gradually and advised investors to avoid silver because of its higher volatility and dependence on industrial demand.

How gold and silver ETFs performed in September?

In September, gold ETFs on an average lost 3.36%. There were 26 funds in the said time period, of which Nippon India ETF Gold BeES and UTI Gold ETF lost 3.40% each. The Wealth Company Gold ETF lost the lowest of around 3.32%.

Silver ETFs in the same time period, on an average lost 4.29%. There were 19 ETFs in the category in the said time period, of which Zerodha Silver ETF lost the most of around 4.36%. Bandhan Silver ETF lost the lowest of around 4.21%.

Way ahead for gold and silver

Choudhary said gold may continue to attract investor interest amid geopolitical uncertainty and inflation concerns, but investors should not rely on it as a primary asset class for long term wealth creation.

He further said that the preference remains an 80:20 equity to debt allocation, with gold treated as a defensive asset and accommodated within the 20% debt portion rather than as an additional allocation. Silver is best avoided given its higher volatility and dependence on industrial demand.

Minocha said that the long-term outlook remains positive, though volatility is expected, gold continues to benefit from central bank purchases and persistent uncertainty, supporting its role as a portfolio diversifier and silver is further supported by industrial demand but experiences greater price fluctuations.

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He further said that investors should adhere to their original strategy rather than chase short-term rallies and pullbacks following strong gains may provide better opportunities to add gradually.

Nehal Meshram, Senior Analyst, Morningstar Investment Research India said the robust inflows recorded in September reinforce gold's enduring appeal within investor portfolios and the continued allocations despite a prolonged rally suggest that investors increasingly view the asset not merely as a tactical trade, but as a long-term store of value and an effective hedge against macroeconomic and geopolitical risks.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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