Gold exchange-traded funds (ETFs) saw their strongest quarterly demand in three years during the March quarter of 2025, according to a World Gold Council (WGC) report released on April 30. The rally was driven by strong inflows as investors sought safe-haven assets amid trade tensions and surging international gold prices.

Global gold investment touched 552 tonnes in Q1CY25, nearly equalling levels last seen during the first quarter of 2022, at the start of the Russia-Ukraine war.

“The latest leg of the uptrend was set in motion by a pick-up in investment flows in January, initially sparked by US tariffs and cemented by concerns over erratic and unpredictable US policy announcements, fears of stagflation and/or recession, continued geopolitical jitters and the consequent turmoil in equity markets of such an uncertain environment,” the WGC noted.

High net-worth individuals and institutional investors remained active in the gold market, further boosting demand. The pursuit of safety and diversification helped sustain the price rally, which in turn reinforced investment momentum.

Gold ETF holdings rose by 226 tonnes in Q1, pushing total holdings to their highest level since May 2023. However, they still remain below the all-time peak recorded in November 2020.

“Global demand for ETFs – which has been positive in 10 out of the last 12 months – accelerated in Q1. Already encouraged by gold’s price momentum, investors spooked by somersaulting US tariff policy rushed for the safety of gold,” the report said.

Gold ETF Growth in India

According to Zerodha Fund House, gold ETFs in India have shown significant growth, with holdings increasing from around 21 tonnes in 2020 to over 63 tonnes in 2025. This upward trend indicates a rising interest among investors in gold in a dematerialised form, in addition to conventional investments in physical gold.

Rise in Gold ETF Folios

The number of Gold ETF folios in India has dramatically increased, rising more than 13 times from March 2020 to March 2025. This surge underscores the escalating popularity of Gold ETFs as an investment choice that provides easy accessibility and eliminates the need for physical storage.

Vishal Jain, the CEO of Zerodha Fund House, remarked that the increase in Gold ETFs signifies a larger trend of investors gravitating towards regulated and easily accessible gold investment options.

Jain said: “The growth in Gold ETFs reflects a broader shift in investor preferences towards regulated and accessible gold investments.”

Taxation comparison for Gold ETFs and Physical Gold

Gold ETFs are subjected to similar tax treatment as equities. Long-Term Capital Gains (LTCG) are taxed at 12.5% if held for over 12 months, while Short-Term Capital Gains (STCG) are taxed based on the applicable income tax slab rates.

In contrast, for physical gold, LTCG is taxed at 12.5% after 24 months, with STCG taxed as per the income tax slabs.

Gold ETF investment

Gold has not only hit record prices in India — trading just below Rs 1 lakh per 10 grams—but has also handsomely rewarded disciplined investors over the past year. A comparative analysis of SIP returns shows gold ETFs have significantly outperformed Nifty 50 ETFs in terms of annualised returns.

The average return for gold ETFs in the current calendar year is 25.07%. There are approximately 17 schemes in this category. The highest return was provided by UTI Gold ETF with 26%, followed by Invesco India Gold ETF with 25.27%. Tata Gold ETF offered the lowest return of 23.99% in the current calendar year.

If an investor had set up a Rs 10,000 monthly SIP in the SBI Gold ETF one year ago, their investment would have delivered an impressive XIRR (extended internal rate of return) of 30.35%. In contrast, a similar SIP in the SBI Nifty 50 ETF would have returned just 2.93% over the same period.

Meanwhile, 15 ETFs benchmarked to the Nifty 50, including SBI’s, delivered far more modest returns, with XIRRs clustered between 2.87% and 3.03%. This sharp divergence underlines gold’s growing role as a tactical asset for Indian investors seeking safety and high short-term returns.

Top Gold ETFs with 1-year Return (As of April 2025)

 

Fund Name	1-Year Return (%)	Expense Ratio (%)	Net Assets (Cr)
UTI Gold Exchange Traded Fund	32.11	0.5	1,844
Tata Gold ETF	31.97	0.36	514.00
HDFC Gold ETF	31.85	0.59	9,026
Quantum Gold Fund	31.84	0.78	299.00
LIC MF Gold ETF	31.48	0.41	294.00
Axis Gold ETF	31.38	0.56	1,553
UTI Gold ETF FoF - Direct Plan	31.26	0.16	225.00
ICICI Prudential Gold Exchange Traded Fund	31.08	0.5	7,189
ICICI Prudential Regular Gold Savings Fund (FOF) - Direct Plan	31.02	0.09	1,909
Aditya Birla Sun Life Gold ETF	31.0	0.47	1,110
Zerodha Gold ETF	30.98	0.31	233.00
Quantum Gold Savings Fund - Direct Plan	30.97	0.03	181.00
Kotak Gold ETF	30.97	0.55	7,167
Mirae Asset Gold ETF	30.94	0.34	734.00
Tata Gold ETF FoF - Direct Plan	30.86	0.16	213.00
SBI Gold ETF	30.84	0.73	7,634
Baroda BNP Paribas Gold ETF	30.82	0.48	88.00
DSP Gold ETF	30.82	0.45	774.00
Invesco India Gold ETF	30.8	0.55	257.00
LIC MF Gold ETF FoF - Direct Plan	30.76	0.2	104.00
HDFC Gold ETF Fund of Fund - Direct Plan	30.73	0.18	3,558
Edelweiss Gold ETF	30.73	0.59	159.00
Nippon India ETF Gold BeES	30.69	0.82	19,782
DSP Gold ETF FoF - Direct Plan	30.45	0.65	76.00
Nippon India Gold Savings Fund - Direct Plan	30.38	0.13	2,744
Invesco India Gold ETF FoF - Direct Plan	30.2	0.1	142.00
Axis Gold Fund - Direct Plan	30.13	0.17	944.00
Kotak Gold Fund - Direct Plan	30.06	0.16	2,835
SBI Gold Fund - Direct Plan	29.85	0.1	3,582
Aditya Birla Sun Life Gold Fund - Direct Plan	29.42	0.2	555.00
Motilal Oswal Gold and Silver ETFs FoF - Direct Plan	27.14	0.15	275.00
Edelweiss Gold and Silver ETF FoF - Direct Plan	25.29	0.05	302.00