Amidst the increasing threat of war, investors are rushing towards gold funds. Global financial markets have been badly affected by the ongoing conflict in the Middle East. In line with international trends, Indian stock markets have fallen by more than 10% in the last one month. However, even amid this war, the value of gold is rising and its prices have gained 5% in the last one month despite the geopolitical turmoil. Prices in the domestic market have increased from around Rs 1,55,000 per 10 grams to Rs 1,65,000 per 10 grams.
Excellent performance of mutual funds
Gold mutual funds have performed brilliantly in the last one year, even before the war started. Nippon India Gold Savings Fund has given returns of about 84.66% in the last one year, while Nippon India Gold ETF BES has given annual returns of 84.23%. Both these funds have been leaders in this category in the last one year. Gold funds of Axis, ICICI, HDFC and Tata Mutual Fund have also performed well during the same period. The returns were so great that huge profits were booked in January this year. This is the reason why there was a month-on-month decline in AUM in February.
What do AMFI figures say?
Data from the Association of Mutual Funds of India (AMFI) shows that total assets under management (AUM) in gold ETF funds stood at Rs 1.83 lakh crore in February 2026, up 165% compared to February 2025. Gold generally serves as a portfolio diversifier and has historically had a low correlation with equities, providing a risk hedge during periods of stock market volatility.
Stock market moves opposite to gold
Gold moves in the opposite direction to stocks when economic uncertainty or fear increases, providing stability when stock markets are underperforming. For this reason investors are getting attracted towards gold mutual funds. During market downturns, geopolitical crises or high inflation, investors often sell stocks and buy gold, causing gold prices to rise while stock prices fall. Fluctuations in gold prices are not directly linked to the performance of stocks, making it an effective means of reducing overall portfolio volatility and providing diversification.