With equity markets running ahead of ground realities in the economy and turning expensive, investors have latched on to gold as an investment option .

Gold exchange traded funds (ETFs) witnessed a net inflow for the sixth month in a row in September.

With net inflow of ₹597 crore in September, the total net inflow into gold ETFs so far this year is ₹5,957 crore.

Himanshu Srivastava, Associate Director, Morningstar India, said with all major economies staring at recession due to the spread of Covid pandemic, gold with its haven appeal has emerged as one of the best performing asset class. Moreover, he added that the surge in Covid cases has cast a doubt on hopes of swift economic recovery and investors are continuing to hedge their exposure to riskier assets by investing a portion of their assets in gold.

Gold may continue to gain traction due to the threat posed by the pandemic to the global economy, say experts.

Sriram Iyer, Senior Research Analyst, Reliance Securities, said the uncertainty over the US election and Brexit will push investors to gold. The moderation in gold price rally recently will also help attract investors, he added.

The yellow metal is trading at about $1,928/ounce now, down from the peak of $2,075 in August.

Chirag Mehta, Senior Fund Manager, Quantum Mutual Fund, said irrespective of who wins the US elections, gold prices will strengthen as the stance on low real interest rate, further quantitative easing and government stimulus would not change given the fact that the state of global economy is not going to revive in the foreseeable future.

“We suggest that investors use the fall in prices to build their allocation to gold which has delivered about 25 per cent returns this year,” he added.