India's Gold ETF Inflows Decline for Second Month, Extending 10-Month Streak

India's gold ETFs saw inflows for the tenth consecutive month in March, but the pace slowed sharply, with net inflows dropping 68% to $176.6 million from $576 million in February. Gold prices fell 11.6% during the month, marking the steepest decline since October 2008.

China also recorded inflows during the month, driven by heightened safe-haven demand amid geopolitical risks, falling local equity markets, and a weaker currency. Meanwhile, North America recorded sizeable outflows of $13 billion in March, ending a nine-month streak of inflows. North America has experienced only two other periods with at least nine consecutive months of inflows—during the Global Financial Crisis and the COVID-19 pandemic—and in both cases the streaks were followed by sharp reversals.

According to the World Gold Council, selling pressure persisted throughout the month and marked the largest monthly outflow on record. Selling was driven by broader risk-off conditions, triggered by Operation Epic Fury, which weighed on most asset classes except oil and likely prompted investors to raise liquidity by selling prior winners such as gold. Commodity Trading Advisors entered mid-March with elevated long positioning and appear to have amplified downside price momentum, forcing weaker hands to capitulate.

Opportunity costs rose as the dollar and interest rates moved higher, while rate expectations shifted from potential cuts in 2026 to rates now expected to remain unchanged through September 2027, adding uncertainty and weighing on gold demand. Germany, Italy, and France led monthly selling. Flows closely tracked gold price movements, with sizeable outflows dominating the second half of March as prices fell, while modest inflows re-emerged toward month-end alongside a price rebound.

At the same time, inflation concerns linked to geopolitical tensions in the Middle East led the European Central Bank to hold rates steady in March while signaling a willingness to hike if inflation accelerates. Rising inflationary pressures and a more hawkish policy stance pushed regional yields higher, increasing the opportunity cost of holding gold. Meanwhile, the euro's depreciation against the dollar exacerbated losses in FX-hedged products, particularly in Switzerland, further weighing on regional flows, World Gold Council data said.