SEBI’s New Rule for Gold and Silver Mutual Funds Effective April 1: All You Need to Know

The capital market regulator, the Securities and Exchange Board of India (SEBI) has revised the valuation methodology for physical gold and silver held by mutual fund schemes, mandating the use of exchange-published polled spot prices.

This new framework replaces the earlier benchmark-linked system and is aimed at improving consistency in valuation while ensuring prices more accurately reflect domestic market conditions.

What Does the New Rule Say?

As per SEBI’s circular, mutual funds must value physical gold and silver based on polled spot prices published by recognised stock exchanges from April 1, 2026. These are the same prices used for settling physically delivered gold and silver derivatives contracts.

The regulator also clarified that the spot polling mechanism must comply with its prescribed guidelines. The move, aligned with the SEBI (Mutual Funds) Regulations, 2026, is designed to enhance transparency, standardisation, and alignment with domestic pricing dynamics.

Why the Change?

SEBI noted that stock exchanges operate under strict transparency and compliance norms. By using prices published by these regulated entities, valuations will better capture domestic market realities while ensuring uniform practices across mutual fund schemes.

Shift From Global Benchmarks

At present, gold and silver ETFs are valued using AM fixing prices from the London Bullion Market Association, adjusted for currency conversion, import duties, transportation costs, and taxes to derive domestic prices.

The new rules mark a transition from this globally anchored approach to a more locally aligned pricing mechanism.

What Does it mean for Investors?

For investors in gold and silver ETFs, the shift to domestic spot pricing is expected to improve transparency and consistency in Net Asset Value (NAV) calculations. It will also make it easier to compare schemes.

Experts note that while ETFs generally track underlying metal prices, differences in valuation methods, tracking efficiency, and liquidity can result in minor return variations. A standardised spot-based framework could help reduce these discrepancies and enhance comparability across funds.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.