Gold ETFs top the returns chart

Gold exchange traded funds topped the returns chart across all categories of schemes over the one-week and one-month investment horizons until Wednesday, as domestic gold prices soared, tracking the trend overseas.

Gold exchange traded funds shone with average returns of 7.26 per cent and 13.48 per cent, respectively, over one-week and three-month tenures.

UTI Gold ETF notched up 7.27 per cent one-week return, followed closely by Kotak Gold ETF and Gold Benchmark Exchange Traded Scheme at 7.26 per cent and 7.24 per cent returns, respectively.

Over three-month period, gold exchange traded funds from UTI Mutual, Kotak Mahindra Mutual, and Benchmark Mutual posted 13.49 per cent, 13.49 per cent, and 13.45 per cent returns, respectively.

International gold prices closed at $830.70 on Wednesday, after touching a 28-year high of $845.60 an ounce in intra-day trade.

They were at $737 a month ago and $789.50 a week ago. Gold prices overseas have been rising because of weakness in the greenback against major currencies and crude oil prices that are close to $100 a barrel.

Gold exchange traded funds seek to provide returns that closely correspond with the returns provided by domestic prices of physical gold.

On Wednesday, Mumbai gold spot prices closed at Rs 10,735 per 10 gm, compared with Rs 9,555 per 10 gm on October 6 and Rs 10,045 per 10 gm on October 31.

In domestic market, appreciation of gold prices has been contained by the relentless rise of the rupee against the greenback because of huge inflows from foreign funds.

The Indian unit closed at Rs 39.3050 a dollar on Wednesday, appreciating over 12 per cent since January.

According to analysts, gold prices are seen rallying further as they expect the US dollar to remain weak amid sluggish economic indicators.

Volume
The volume in each gold exchange traded fund multiplied on Wednesday as investors bought gold units on 'Dhanteras', or 'Dhanwantari Triodasi', which is the first day of the Diwali festival and is considered auspicious for the purchase of precious metals in any form, officials said.

The volume in UTI Gold ETF Wednesday was 17,477 units, compared with 6,619 units a week ago and 5,988 units a month back.

Similarly, Wednesday's volume in Gold Benchmark Exchange Traded Scheme, India's first gold fund, surged to 17,342 units from 7,262 units a week back and 23,141 units a month ago.

The volume in Kotak Gold ETF increased to 8,123 units from 3,141 a week ago and 394 units a month back.

Gold Feeder Fund
Despite the rise in gold prices, DSP World Gold Fund, India's only gold feeder fund, lagged behind gold exchange traded funds. The scheme posted 2.36 per cent and 12.22 per cent returns over one-week and one-month periods, respectively.

The feeder fund from DSP Merrill Lynch Mutual invests its corpus in Merrill Lynch International Investment Funds' World Gold Fund, which in turn deploys it in companies involved in gold mining overseas.