SEBI Revises Gold and Silver ETF Valuation Rules; New Framework Effective from April 1
Market regulator Securities and Exchange Board of India (SEBI) has announced a significant change in the valuation methodology for physical gold and silver held by mutual fund schemes. The revised framework will come into effect from April 1, 2026, and aims to make the valuation process more transparent and aligned with domestic market conditions.
The move will directly impact Gold and Silver Exchange Traded Funds (ETFs) as well as mutual fund schemes that invest in physical bullion.
What Was the Earlier Valuation Method?Under the existing norms, Gold and Silver ETFs determined the value of their holdings based on the AM fixing price published by the London Bullion Market Association (LBMA).
The LBMA benchmark price, quoted in US dollars, was first converted into Indian rupees. After that, adjustments were made for local factors such as:
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Transportation costs
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Customs duty
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Applicable taxes
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Other domestic charges
In other words, the base reference for valuation was an international benchmark, which was then modified to reflect Indian conditions.
After discussions with its Mutual Fund Advisory Committee and public consultation, SEBI has decided that mutual funds will now use the pooled spot price published by recognized Indian stock exchanges for valuation.
This is the same spot price used for settlement of physical delivery-based gold and silver derivative contracts on domestic exchanges.
According to SEBI, Indian stock exchanges operate under a stringent regulatory and compliance framework. Therefore, exchange-published spot prices are considered more reflective of real-time domestic demand and supply dynamics.
To ensure uniform implementation, the Association of Mutual Funds in India (AMFI), in consultation with SEBI, will formulate a standardized policy. All mutual fund houses will be required to follow this uniform methodology.
The regulator believes that shifting from a foreign benchmark to a domestic exchange-based spot price will:
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Improve transparency in valuation
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Reduce discrepancies between schemes
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Align NAV more closely with Indian market realities
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Ensure greater standardization across fund houses
Since exchange prices are determined within a regulated domestic framework, the valuation process is expected to become more robust and consistent.
Impact on InvestorsThe change will directly affect investors in:
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Gold ETFs
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Silver ETFs
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Mutual fund schemes holding physical bullion
From April 1, 2026, the Net Asset Value (NAV) of these schemes will be more closely linked to Indian exchange spot prices instead of the LBMA benchmark.
What Could Change?Closer alignment with domestic prices: NAV may better reflect Indian demand-supply conditions and local market factors.
Reduced valuation differences: Variations in NAV calculations across fund houses are likely to decline due to standardized pricing.
Short-term fluctuations: Since international prices and domestic spot prices may not always move in perfect sync, minor short-term variations in NAV could occur.
However, for long-term investors, the structural investment thesis of gold and silver ETFs remains unchanged. The reform primarily alters the pricing reference mechanism rather than the underlying asset exposure.
SEBI’s decision marks a shift toward domestic price discovery for bullion-backed mutual fund schemes. By replacing international benchmarks with Indian exchange spot prices, the regulator aims to enhance transparency, standardization and investor confidence.
Investors holding or planning to invest in Gold or Silver ETFs should take note of the April 1 implementation date and understand that while valuation methodology is changing, the fundamental nature of these investments remains the same.