In terms of the flow of funds as well, of the first five months of the financial year, for April and May, the outflows have been greater than the inflows. On the contrary, gold ETFs had provided net inflows in all the five months of 2011.

“Gold ETFs had an exemplary last year. There are multiple reasons why it has been seeing lesser flow of funds this time. The import duty hike and regulations had dampened the demand for metal. Profit-booking has been happening at higher levels,” said Lakshmi Iyer, Head – fixed income and product), Kotak Mahindra Asset Management reports Mydigitalfc.com.

As per the data published by the World Gold Council, the investors demand for gold in the April to June has been down by 51 percent. The investors demand mostly comprises consumption in the form of gold bars, coins and instruments like gold ETFs.

According to Lalit Nambiar, senior VP and Fund Manager, UTI AMC, gold consumers are mostly found in metros and their number decrease in smaller towns and cities. Most of the People in India are also not very comfortable with dealing in the yellow metal in virtual form.