Gold ETFs log Rs 457 crore outflow in July

Gold Exchange Traded Funds (ETFs) witnessed a net outflow of Rs 457 crore in July as investors parked their money in other asset classes as part of their portfolio rebalancing strategy.

This was in comparison to a net inflow of Rs 135 crore in June, data with Association of Mutual Funds in India (Amfi) showed.

Kavitha Krishnan, Senior Analyst Manager Research at Morningstar India, said that significant outflows seem to have risen out of investors' expectations of a rising interest rate cycle leading to a fall in gold prices, thus impacting the net flows into the gold ETFs. Also, a falling rupee is another factor that has likely impacted the demand and supply dynamics of gold. This trend has been witnessed globally too, with gold ETF's posting significant outflows on the back of lower gold prices, she added.

"This outflow could be directed toward money being diverted from gold to other asset classes as a part of a portfolio rebalancing strategy," Priti Rathi Gupta, Founder of LXME, said. The outflow has pulled down the asset under management of the category to Rs 20,038 crore last month from Rs 20,249 crore in June.