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In recent times, Gold ETFs have created a milestone in the Indian market. Gold assets in India have crossed the Rs. 1 crore mark for the first time. This unexpected increase hints at a higher demand for gold-backed products. Notably, the news appears at a time when market volatility and inflation concerns continue to dominate investor behaviour.
At this juncture, digital gold in the form of ETFs has emerged as a preferred low-risk asset class. Analysts predict that both retail and institutional investors have been turning to gold ETFs for tax efficiency, lower storage risk, and transparent pricing compared to physical gold.
The recent study by Zerodha Fund House first flagged the monumental jump in inflows and noted that the ETF market is now expanding faster than any other commodities-linked investment category.
India’s Gold ETF segment has observed its strongest momentum ever in 2025. As per the reports by Zerodha Fund House, net inflows to gold ETFs in the year rose to approximately Rs. 27,500 crore, which is higher than the total combined inflows from 2020 to 2024.
The most important part here is the investor participation, which has skyrocketed as the number of Gold ETF folios reportedly climbed to more than 95 lakh nationwide, marking an explosive jump from just under 8 lakh in 2020.
In the last year, the ETF market has seen its assets double. According to the asset managers, the fund houses hold more than 83 tonnes of physical gold. This rapid shift in approach indicates that gold has shifted from a luxury product to a popular tool for wealth accumulation.
Also Read: Best Ways to Buy Gold: Digital, Physical, or ETFs?
The landmark milestone is not an isolated spike but the result of a multi-year shift in savings and investment patterns. Over the past five years, rising gold prices, concerns over global economic stability, equity market corrections, and geopolitical shocks have pushed investors toward gold as a hedge. ETFs have benefited significantly from this shift because they allow investors to buy fractional quantities, automate purchases through SIPs, and avoid making charges and purity risks associated with physical gold.
Tax benefits have also played a crucial role. Gold ETFs provide favourable long-term capital gains treatment, making them more attractive than physical gold, especially for long-horizon investors. Combined with the comfort of digital investing and instant liquidity, the demand curve for gold ETFs has consistently trended upward.
The flow of gold ETFs is now more than just temporary safe-haven demand, with AUM exceeding Rs. 1 lakh crore. Analysts believe that gold has strengthened its position as a mainstream asset class like stocks and mutual funds. However, the actual test will arrive after the stock market returns to full strength. Whether the investors will keep on doing allocations or will rebalance aggressively will be the factor determining the long-term strength of this surge.
