Bullish for Gold ETFs: PM Modi's Call May Shift Gold Demand

PM Modi has urged domestic investors to avoid buying physical gold, coinciding with a fall in MCX gold futures for June 2026 delivery. This has sparked a discussion among experts regarding the outlook for Gold ETFs as an alternative investment avenue.

The Prime Minister's statement, if widely adopted, could significantly alter the demand pattern for gold in India, shifting it from physical forms to financial instruments like Gold ETFs and Sovereign Gold Bonds. This has implications for India's current account deficit and the financialization of savings.

This development is potentially positive for Asset Management Companies (AMCs) that manage Gold ETFs (e.g., HDFCAMC, NIPPONIND). An increase in investor preference for Gold ETFs over physical gold would lead to higher Assets Under Management (AUM) for these funds, boosting AMC revenues. Conversely, jewelers and physical gold retailers might face reduced demand.

Traders should monitor the inflows into Gold ETFs and Sovereign Gold Bonds in the coming months to gauge the actual impact of PM Modi's statement. Also, observe any government policies or campaigns promoting financial gold instruments. The price movement of gold itself will continue to be influenced by global factors.

• •PM Modi urges domestic investors to avoid buying physical gold.
• •MCX gold futures for June 2026 delivery fell ₹532, or 0.3%, to ₹1,52,000 per 10 grams.
• •Experts are discussing the outlook for Gold ETFs.
• •Risk flag: Lack of sustained investor shift
• •Risk flag: Global gold price volatility