Gold, silver ETFs steal spotlight from equity funds despite correction; should you buy?

Passive funds have been attracting a big chunk of inflows from India households, thanks to a solid interest of domestic investors in the precious metals – gold and silver. The exchange traded funds (ETFs) of these two metals attracted inflows of Rs 33,500 crore during the month, surpassing equity fund inflows of Rs 24,029 crore, suggest the recent data from AMFI.

Gold and silver have been attracting investors’ interest thanks to the astounding rally in the precious metals lately. Silver ETFs delivered an extended internal rate of return (XIRR) of 62 per cent between 2022 and 2026, while Gold ETFs delivered a 42 per cent XIRR during the period under review.

Systematic investments continue to remain stable, even during corrections, said Saurabh Jain, Co-founder and CEO at Stable Money. Investors are financially aware and increasingly view price declines as opportunities to enter or add to positions rather than exit in panic, he said.

Adding to this, Varun Gupta, CEO at Groww Mutual Fund said that the flows into these instruments were not merely incidental to the recent rally but reflect a structural financialization of precious metals in India, suggesting investors increasingly preferring financial formats over physical holdings.

Market experts had attributed the rise to favourable currency movements and increased allocation to safe-haven assets amid weaker domestic equity markets and persistent geopolitical and trade-deal related risks for the spectacular rise in the gold-silver prices.

According to the AMFI data, Gold ETFs recorded inflows of more than Rs 24,039 crore in January 2026, while silver ETFs saw inflows of Rs 9,463 crore in the first month of 2026. Both metals had shown a sharp rally lately, reflecting a strong commodity price movement in 2025. However, both the metals have seen some profit booking lately.

ETFs offer structural advantages such as greater liquidity,  transparent pricing, easy tradability, no storage requirements, minimal purity concerns, and no making charges, that make them efficient vehicles for precious metal exposure, said Gupta, while commenting on benefits of investing in an ETF to play the precious metal theme.

Precious metal ETFs offer a transparent and regulated route to gain exposure, which makes them a more robust option compared to unregulated alternatives like digital gold. ETFs also eliminate concerns around storage, purity, and liquidity that come with physical gold, while offering ease of trading and better price discovery, says Jain from Stable Money.

While gold has tumbled around 15 per cent from its 52-week highs lately and silver is down nearly 30 per cent from its peak, their respective ETFs have also tumbled in similar fashion. Inflows in the gold and silver ETFs remained resilient despite market volatility, signaling strong investor appetite for the asset class.

Market experts believe that for an investor short-term volatility is likely to persist, largely driven by geopolitical and macro uncertainty rather than any meaningful change in fundamentals. They integrate seamlessly with demat holdings and enable disciplined allocation or rebalancing in one’s portfolios.

Gold, in particular, continues to play its traditional role as a portfolio hedge and safe-haven asset. For investors looking to participate in the precious metals theme, a SIP-based approach is advisable to smoothen volatility. Starting small, staying disciplined, and choosing regulated products such as ETFs can help investors build exposure steadily, added Jain.

Precious metals serve the purpose of portfolio diversification. Gold tends to act as a hedge against macroeconomic uncertainty, while silver also offers exposure to industrial and technological demand,” added Gupta from Groww. “Investments in gold and silver should form part of a well-defined asset allocation strategy, determined by an investor’s risk tolerance and time horizon.”