India Gold Fund Buying Rises

May 14, 2012 at 15:41

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Indian investment in gold exchange-traded funds picked up in April even as jewelry sales were flat, industry data showed Monday.

Assets in gold exchange-traded funds grew 3.4% in April from a month earlier, data released by the Association of Mutual Funds in India showed, thanks to the appeal of investing in gold during the festival of Akshaya Tritiya.

Assets in gold ETFs, or paper gold, grew 1.9% in February and 0.9% March amid stagnant prices and reduced safe-haven appeal. But growth improved in April as many Hindus believe buying gold during Akshaya Tritiya helps multiply wealth.

In value terms, assets in gold ETFs increased to 102.18 billion rupees ($1.91 billion) as of April 30 from 98.86 billion rupees on March 31.

Buyers typically crowd into jewelers’ shops in the days leading up to Akshaya Tritiya, which fell on April 24 this year. But only a few did so this year. Consumers see better value in ETFs as they are sure of the gold’s purity, and because investing in ETFs isn’t accompanied by costs charged for making the gold into jewelry.

The trade value of gold ETFs on the National Stock Exchange rose to 6.08 billion rupees as of April 24 from 4.23 billion rupees a year earlier, while the total number of units traded grew 10% to 2.2 million.