The market regulator SEBI has introduced a major change in how physical gold and silver held in mutual fund schemes are valued.
This new framework will take effect from April 1, 2026, aiming to make valuations more transparent and better aligned with the domestic market.
SEBI has announced that the Association of Mutual Funds in India (AMFI), in consultation with SEBI, will create a uniform policy to implement this change. This ensures that all mutual fund houses follow the new rules in a consistent way.
How Valuation Worked Before
Until now, gold and silver ETFs valued their holdings based on the AM fixing price of the London Bullion Market Association (LBMA).
This international price was converted into Indian rupees, and then transport costs, customs duties, taxes, and other domestic costs were added to arrive at the final valuation.
Essentially, valuations were based on a foreign benchmark, adjusted for Indian conditions.
What Changes Are Coming
After discussions with the Mutual Fund Advisory Committee and public consultation, SEBI has decided that mutual funds will now use the polled spot prices published by recognised stock exchanges for settling gold and silver derivative contracts with physical delivery.
Since stock exchanges operate under a strict regulatory and transparency framework, SEBI believes that these exchange-published spot prices will better reflect the real domestic market.
This change will also standardise valuations across different schemes and reduce inconsistencies between fund houses.
Impact on Investors
This new valuation system will directly affect investors in gold and silver ETFs or mutual fund schemes that invest in physical bullion.
The NAV (Net Asset Value) will now be more closely linked to the spot price on domestic exchanges, reflecting India’s local supply-demand and market conditions more accurately.
Differences in valuations between different fund houses are expected to decrease, improving transparency and trust.
NAVs may experience minor short-term fluctuations due to differences between international and domestic spot prices.
