Why did new gold ETF folios in India drop from 12 lakh in January 2026 to only about 4,000 by August? The answer lies in changing investor behavior and market conditions. While gold remains popular, many investors shifted from gold ETFs to digital gold and other forms of investment.
- New gold ETF folios peaked at 12 lakh in January 2026 but dropped to 4,000 by August.
- Gold ETF inflows in August rose 67% from July, mostly from existing investors.
- Institutions hold 58% of gold ETF assets; retail investors hold only 11%.
- Digital gold purchases through UPI apps doubled in August compared to the previous year.
- Gold prices peaked in January and then corrected by over 10%, affecting investor sentiment.
What caused the sharp decline in new gold ETF folios?
The decline in new gold ETF folios started soon after January 2026. Although gold prices were high in January, many investors entered near the peak. When gold prices corrected by more than 10%, some investors faced losses or no returns, which discouraged further investment in gold ETFs.
Additionally, India's import duty on gold increased from 6% to 15% in May 2026, pushing domestic gold prices higher. This may have caused some investors to book profits or hesitate to invest further. However, the drop in new folios began before this duty hike, indicating other factors at play.
Are gold ETFs still attracting investments?
Yes, gold ETFs continue to attract investments, but mostly from existing investors rather than new ones. In August 2026, inflows into gold ETFs rose by 67% compared to July, reaching ₹2,597 crore. However, this money mainly came from investors who already held gold ETF folios.
It is important to note that gold ETFs are largely held by institutions, which own 58% of assets. Wealthy individuals hold 31%, and retail investors only 11%. This means that while retail investor interest has declined, institutional investment remains strong.
Why are digital gold purchases increasing?
Digital gold has become more popular, especially among retail investors. Purchases of digital gold through UPI apps averaged ₹2,500 crore per month from June to August 2026, equivalent to about 1.6 tonnes of gold monthly. August purchases were up 110% compared to the previous year.
Digital gold appeals because it is easy to buy with small amounts, sometimes as low as ₹10, and can be purchased through apps people already use. Convenience and user experience often matter more to new investors than regulatory details or custody structures.
Has India's overall appetite for gold changed?
India's appetite for gold has not decreased but shifted in form. While new gold ETF folios declined, digital gold purchases increased significantly. This suggests that first-time buyers may have paused or moved to products with less friction and easier access.
Other factors, such as a weaker rupee and government advice to avoid non-essential gold purchases, may have influenced buying behavior. However, these factors do not fully explain the early decline in new gold ETF folios, which began before these events.
What can investors learn from this trend?
Investors should understand that gold prices can fall as well as rise, and timing matters. The sharp correction after January 2026 showed that even traditionally safe assets like gold carry risks. New investors may prefer convenient options like digital gold, but they should also consider the regulatory environment and long-term goals.
Overall, gold remains an important part of many investment portfolios, but how people invest in gold is evolving with technology and market conditions.
