Kolkata: Sebi has announced a change in the reference point of gold and silver prices to which mutual funds/ETFS ill link their NAVs to (Net asset value). While t was the price points of the London Bullion Market Association so far, the practice is going to change. The prices will be fixed according to those in the spot prices of the Indian bullion market the regulator has stipulated. The date will be April 1, 2026.
Implication for investors
SEBI states that the purpose of this change is to increase transparency in valuations and ensure that gold and silver prices in mutual fund schemes accurately reflect domestic market trends. It is believed that this will further strengthen investor confidence in pricing in commodity-based mutual funds, including gold and silver ETFs, both of which have received huge inflow of funds in 2025.
Mutual Fund Advisory Committee deliberations
Sebi has said that the decision to shift the reference point from London to India was taken after detailed discussions in the Mutual Fund Advisory Committee. The committee was of the opinion that the spot prices issued by regulated stock exchanges meet the standards of transparency and compliance. This will allow valuations to better reflect the actual conditions of the domestic market and bring uniformity across all mutual funds.
New spot prices
There are quite a few factors that determine the spot prices of the two precious metals in India which cause a difference from those in the LBMA. There are factors like exchange rates, customs duty, transportation costs, taxes and other local adjustments that are added to determine the domestic spot price. Sebi thinks the new system will eliminate this needlessly complex process and make valuation more transparent and simple. India imports a huge amount of gold and silver every year and therefore, the foreign exchange rates are a big determinant of the spot prices in India.
The prices used by the mutual funds will be the same spot prices used for settlement of physically delivered gold and silver derivative contracts. This system will be in accordance with the spot polling guidelines issued by SEBI from time to time.
This change will be effective simultaneously with the SEBI Mutual Fund Regulations 2026. SEBI has also stated that the industry body, the Association of Mutual Funds in India, will work with SEBI to formulate a uniform policy for the implementation of these rules.
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