India's Sebi Mandates New Gold & Silver MF Valuation from April 1, 2026

India's capital markets regulator, the Securities and Exchange Board of India (Sebi), has announced a significant overhaul of the valuation methodology for physical gold and silver held by mutual fund schemes. Effective April 1, 2026, funds will be mandated to use polled spot prices published by stock exchanges for calculating the worth of their precious metals holdings, moving away from the existing benchmark-linked approach.

This pivotal change, announced on Thursday, dictates that the spot prices used for the settlement of physically delivered bullion derivatives contracts will now form the basis for valuing such assets. The move aims to ensure that mutual fund valuations more accurately reflect domestic market conditions, fostering greater uniformity and transparency across the sector.

Key fact: India's Sebi circular states mutual funds will value physical gold and silver using polled spot prices from recognised stock exchanges for physically delivered derivatives contracts starting April 1, 2026.

What's Changing for Gold and Silver Valuation?

Currently, gold and silver Exchange Traded Funds (ETFs) and other mutual fund schemes typically value their physical holdings based on the AM fixing prices of the London Bullion Market Association (LBMA). This international benchmark is then adjusted for various domestic factors, including currency conversion, transportation costs, customs duty, taxes, and other levies to arrive at a local price.

The new directive by Sebi replaces this multi-faceted calculation with a more direct and domestically focused method. By linking valuations to the polled spot prices used for physically delivered bullion derivatives contracts on recognized stock exchanges, Sebi intends to create a valuation standard that is inherently tied to India's own market dynamics. This shift aligns with the Sebi (Mutual Funds) Regulations, 2026, underscoring a broader regulatory push towards market integrity. The Association of Mutual Funds in India (Amfi), in consultation with Sebi, will play a crucial role in prescribing a uniform policy for the smooth implementation of these new rules.

How Will This Impact Precious Metals Mutual Funds?

This regulatory adjustment marks a significant step towards localizing the valuation process for precious metals funds in India. For investors in precious metals ETFs and other schemes, this could lead to several implications:

• Enhanced Transparency: Valuations will directly reflect real-time domestic market activity, potentially reducing discrepancies between a fund's Net Asset Value (NAV) and the actual local market price of gold and silver.
• Reduced Basis Risk: Reliance on international benchmarks carries basis risk due to currency fluctuations and other adjustments. The new method is expected to mitigate some of this risk by focusing on local spot prices.
• Uniformity: A standardized valuation method across mutual funds is expected to bring greater consistency, making it easier for investors to compare different schemes.
• Market Efficiency: The direct linkage to exchange-polled spot prices could encourage greater participation and liquidity in domestic bullion derivatives markets.

Current Market Snapshot: Gold and Silver Prices Today

The announcement comes amidst a dynamic period for the broader precious metals market. Investors monitoring precious metals prices today will note the strong performance of gold and silver.

• Current Prices: As of February 26, 2026, gold prices stand at $5179.42/oz, while silver prices are at $86.86/oz. These figures highlight the continued appeal of safe-haven assets.
• Gold/Silver Ratio: The current gold and silver ratio is 59.6, indicating that silver is trading at a historically low multiple relative to gold, which often sparks interest among value investors. For a deeper dive into historical ratios, visit our dedicated page on metalprices.live.
• Macro Environment: The macro landscape suggests persistent inflationary pressures, with the 10-Year Treasury yield at 4.04% and Breakeven inflation at 2.26%. The TIPS (real rate) stands at 1.78%. Such conditions are generally supportive of precious metals as an inflation hedge.
• ETF Holdings: According to Bloomberg data, physical silver ETF holdings (SLV) saw a slight decrease from 16107.9 tonnes on February 25 to 16079.8 tonnes on February 26, reflecting minor short-term shifts in investor sentiment.
• COT Positioning: CFTC reports show robust speculative interest, with silver specs net long 24,003 contracts (out of 131,496 OI) and gold specs net long 159,915 contracts (out of 407,078 OI). This suggests confidence in upward price trajectories.
• Central Bank Buying: The latest month saw central banks globally adding 26.5 tonnes to their reserves. Notably, China led with 15.0t, followed by India with 4.0t, and Poland with 3.0t. This consistent demand from official institutions, particularly from India, underscores the strategic importance of gold in national reserves, as reported by the World Gold Council.
• COMEX Vaults: COMEX vaults indicate a decrease in physical holdings, with silver down 67.1 tonnes (total 11255 tonnes) and gold down 2.3 tonnes (total 1046 tonnes). Declining vault levels can signal strong physical demand or shifting inventory dynamics, which you can track on our COMEX data page.
• Analyst Forecasts: Analyst consensus, based on 14 banks, projects a median gold price of $5000, with a range of $4400-$6200. For silver, 8 banks provide a median forecast of $45. These forecasts reflect an optimistic outlook for the sector.

Outlook: What's Next for India's Precious Metals Market?

The new valuation rules from Sebi represent a significant step towards enhancing the integrity and domestic relevance of India's precious metals investment landscape. Investors in gold and silver prices will need to monitor how this change impacts fund performance and transparency. The role of Amfi in defining the implementation policy will be critical in ensuring a smooth transition for mutual funds.

This move could set a precedent, potentially influencing other markets or asset classes in India to adopt more domestically relevant valuation benchmarks. For those considering precious metals IRA or other long-term investments, understanding these regulatory shifts is paramount for informed decision-making. You can always monitor the latest precious metals prices on metalprices.live.

Key Takeaways

• Sebi mandates new valuation for gold and silver mutual funds: Effective April 1, 2026, funds must use polled spot prices from stock exchanges.
• Replaces LBMA benchmark: The previous method of using LBMA AM fixing with adjustments will be discontinued.
• Aims for transparency and domestic relevance: The change is designed to better reflect India's market conditions and promote uniformity.
• Industry body Amfi to guide implementation: Amfi will work with Sebi to prescribe a uniform policy.
• Market remains robust: Gold ($5179.42/oz) and silver ($86.86/oz) prices are strong, supported by central bank buying and speculative interest.

Frequently Asked Questions

Q: What was the previous method for valuing physical gold and silver in Indian mutual funds? A: Previously, Indian mutual funds, particularly gold and silver ETFs, valued their physical holdings based on the London Bullion Market Association (LBMA) AM fixing prices. These international prices were then adjusted for various domestic factors like currency conversion, transportation, customs duty, and taxes to arrive at a local valuation.

Q: Why did Sebi decide to change the valuation methodology? A: Sebi's decision aims to ensure that the valuation of physical gold and silver by mutual funds better reflects actual domestic market conditions in India. The move also seeks to promote greater uniformity and transparency across the mutual fund industry, aligning with the broader Sebi (Mutual Funds) Regulations, 2026.

Q: How will this new valuation method impact my mutual fund investments in gold and silver? A: The new method is expected to make the Net Asset Value (NAV) of your gold and silver mutual funds more directly responsive to domestic spot prices, potentially reducing discrepancies with local market rates. This could lead to increased transparency and a more accurate reflection of the domestic precious metals spot price, ultimately benefiting investors with more localized and consistent valuations.