Do you know how Gold & Silver ETF and Mutual Fund NAV is valued daily? SEBI changed this gold valuation rule from April 2026. Here is what changed and why.
Most investors have never thought about this. You buy a Gold ETF. You watch the NAV go up and down with gold prices. You feel everything is working as it should. But have you ever stopped and asked yourself — which gold price is my fund actually looking at every day to calculate my NAV?
The price your local jeweller quotes? The price on your phone’s news app? The price on MCX? Or something else entirely? Here is the answer.
Until March 31, 2026, your Indian Gold ETF was looking at a price fixed every morning in London. In US Dollars. By an international organisation sitting thousands of miles away — one that has nothing to do with Indian taxes, Indian import duties, or Indian gold demand. Does that sound odd to you? It did to SEBI too.
That is exactly why, from April 1, 2026, SEBI has changed how physical gold and silver held by Indian mutual fund schemes are valued — replacing a complicated London-linked method with something far more logical, transparent, and genuinely Indian.
Let me walk you through the whole thing from scratch. No jargon. Plain language. Just the facts you need to know as an investor.
Do You Know How Gold & Silver ETF and Mutual Fund NAV Is Valued?
What Is NAV? Why Does the Valuation Method Even Matter?
Let us start from the very beginning, because everything else builds on this.
NAV stands for Net Asset Value. It is simply the price of one unit of your mutual fund or ETF on any given day. If you hold 10 units of a Gold ETF and today’s NAV is Rs.600, your investment is worth Rs.6,000 that day.
A Gold ETF holds physical gold on your behalf. A Silver ETF holds physical silver. So naturally, when gold prices rise, your NAV rises. When gold prices fall, your NAV falls.
That part is simple. But here is the question nobody asks — which gold price does the fund use to arrive at that NAV figure every single evening? That is where the real story begins. And that is what SEBI has now completely changed.
The Old Method — Your Indian Gold Was Being Priced in London Every Morning
Until March 31, 2026, every Gold ETF and Silver ETF in India valued their physical holdings using a price published by an international body called the London Bullion Market Association — LBMA for short.
The LBMA is a London-based organisation that publishes gold and silver prices twice a day — once in the morning (called AM fixing) and once in the afternoon (PM fixing). Indian fund houses were picking up that AM fixing price every morning as the starting point for calculating your NAV.
Now here is where the problem begins.
That LBMA price is in US Dollars per troy ounce. India does not trade gold in dollars. India does not measure gold in troy ounces. And the price of gold in India is heavily shaped by customs duty, local taxes, transportation costs, and domestic demand — none of which London knows or cares about.
So every fund house had to perform the following chain of adjustments every single day — manually — before they could arrive at a NAV figure for your fund:
Step 1 — Convert US Dollars into Indian Rupees using that day’s exchange rate
Step 2 — Convert troy ounces into grams since we measure gold in grams in India
Step 3 — Add customs duty since gold imported into India attracts significant import duty
Step 4 — Add transportation and insurance costs involved in physically bringing gold to India
Step 5 — Add all applicable taxes and levies
Step 6 — Add or subtract a “notional premium or discount” — each fund house’s own internal estimate of current Indian market conditions
Now please read Step 6 again slowly.
That last adjustment had absolutely no standard rule behind it. No regulator told the AMC what this number should be. Each fund house made its own internal estimate, using its own internal logic. SBI Mutual Fund used one number. HDFC Mutual Fund used a different number. Nippon used yet another. Every AMC was essentially doing its own back-of-the-envelope calculation to arrive at an Indian price.
What Problem Did This Actually Create For You as an Investor?
Here is where things get genuinely unfair — and most retail investors never even realised it was happening.
Imagine two Gold ETFs sitting side by side on your investment app — Fund A from ABC and Fund B from XYZ. Both hold exactly the same quantity of physical gold per unit. Same gold. Same purity. Same quantity. No difference whatsoever in what they actually hold.
Under the old LBMA method:
- ABC’s back-office team applies a notional premium of, say, Rs.5 per gram in their internal calculation
- XYZ’s back-office team applies a notional premium of Rs.8 per gram in their internal calculation
Result? XYZ’s Fund NAV appears Rs.3 higher than ABC’s Fund NAV on your screen — not because XYZ holds better gold, not because XYZ is a more efficient fund, but simply because their back-office team used a different internal number that day.
You, as an investor, look at both funds on your app and naturally assume one is outperforming the other. You might even consider switching funds. But that assumption would be completely wrong. It was just an artificial accounting difference — one that had absolutely nothing to do with actual fund quality or real gold prices.
Niranjan Avasthi, Senior VP at Edelweiss Mutual Fund, confirmed this exact problem: some ETFs used to account for the difference between LBMA prices and actual Indian market prices, and some did not — leading to valuation divergence across fund houses for the same underlying asset.
Let me give you a simple everyday example to make this crystal clear.
Imagine two shops on the same street, both selling the exact same 100 grams of gold. You walk into Shop A — their weighing scale shows 98 grams. You walk into Shop B — their weighing scale shows 103 grams. Both scales are weighing the same gold. But each shopkeeper calibrated their own machine differently. You cannot trust either reading. You certainly cannot compare the two shops fairly based on these readings.
That is exactly what was happening with Gold ETF NAVs across different fund houses in India. Different internal calibration. Same underlying gold. Completely misleading comparison for ordinary investors like you and me.
The New Rule — India’s Own Price, From April 1, 2026
SEBI, after holding discussions with the Mutual Fund Advisory Committee (MFAC), seeking public feedback, and consulting all market stakeholders, decided this had to stop.
As per SEBI Circular No. HO/(68)2026-IMD-POD-2/I/5780/2026 dated February 26, 2026, from April 1, 2026, all mutual funds must now value their physical Gold and Silver using polled spot prices published by recognised Indian stock exchanges.
Which Indian stock exchanges? Specifically, exchanges that are already used for the settlement of physically delivered Gold and Silver derivatives contracts in India — currently, MCX (Multi Commodity Exchange of India) and BSE are among the exchanges providing such polled spot prices.
Now what is a “polled spot price”? In simple words — MCX goes out to a wide cross-section of actual market participants — traders, dealers, jewellers — and gathers their price quotes for gold and silver from identified market centres across India. It then arrives at a representative domestic spot price from all those real-world inputs. This price reflects what gold and silver are actually trading for in India — right here, right now.
So instead of going to London every morning for a price in US dollars and then doing 5 to 6 manual adjustments that differ from one AMC to another, every fund house will now simply pick up the same Indian market price, from the same regulated Indian exchange, every single day.
Going back to the weighing machine example — SEBI has now said: every shop must use the same standard government-certified weighing scale. No more each shopkeeper calibrating their own machine differently. One scale. One standard. Every fund house. Every day.
But Will All Gold ETF NAVs Become Identical Now?
This is the most natural question at this point — and it absolutely deserves a clear answer.
No. All Gold ETF NAVs will not become identical. And they should not.
Gold prices still go up and down every single day. All Gold ETF NAVs will continue moving with gold prices. Two funds from two different fund houses will still show somewhat different NAVs. That is completely normal and expected.
But here is the critical shift — after April 1, 2026, any NAV difference between two funds will be a real and meaningful difference, not an artificial one.
If you now see Fund A’s NAV higher than Fund B’s NAV over a period of time, it will only be because of genuine reasons such as:
Expense ratio — if Fund A charges 0.50% per year and Fund B charges 0.25% per year, over time Fund B’s NAV will compound faster. This is a real difference that tells you which fund costs you less
Tracking efficiency — how well each fund actually manages buying, storing, and accounting for its physical gold holdings
Cash drag — funds keep a small portion of their corpus in cash to handle daily redemptions; this small difference varies across fund houses
These are real, meaningful differences. They tell you something genuinely useful about which fund is run more efficiently and at a lower cost to you.
What the new rule permanently removes is the artificial noise — the part where two funds holding identical gold showed different NAVs simply because one AMC’s team applied a different notional premium from another’s. That fake, misleading difference is now gone for good.
In fact, Niranjan Avasthi from Edelweiss Mutual Fund put it simply: “Gold and Silver ETF NAV returns for all ETFs will now be closer to each other.” That is precisely what this reform achieves.
| Before April 1, 2026 | From April 1, 2026 | |
| Price reference | LBMA, London (in US Dollars) | Indian stock exchange (in Indian Rupees) |
| Who sets the price | International body in London | Regulated Indian exchanges like MCX, BSE |
| Adjustments needed | 5 to 6 layers, each AMC decides its own | Minimal and uniform for all fund houses |
| Why NAVs differed | Real difference + artificial AMC adjustment | Only real differences like expense ratio |
| Can you compare two Gold ETFs? | Not reliably | Yes, reliably and meaningfully |
What Should You Do as an Investor Right Now?
Nothing. Absolutely nothing urgent.
If you are already holding Gold ETFs, Silver ETFs, or Gold and Silver Mutual Funds — whether through SIP or lumpsum — simply continue. Your physical gold and silver holdings inside the fund are completely untouched. Your units are safe. There is no exit required, no switching needed, no paperwork from your end.
On or around April 1, 2026, you might notice your Gold ETF or Silver ETF NAV looking slightly different from how it was trending in the days before. Please do not panic. This is not a loss. It is not a fund error. It is simply the one-time effect of switching from the old London-based pricing method to the new Indian exchange-based pricing method. Once this transition settles, your NAV will continue to behave exactly as it always has — rising when gold rises, falling when gold falls.
SEBI has also directed AMFI (Association of Mutual Funds in India) to work out a detailed uniform policy on how this spot price polling will operate on a day-to-day basis across all fund houses. Further operational clarity from AMFI is expected soon.
Conclusion –
This is a sensible and long-overdue correction by SEBI — and honestly, it is surprising it took this long.
For years, the LBMA-based method quietly confused ordinary investors without anyone clearly explaining what was actually happening behind the scenes. You would look at two Gold ETFs on your app, see different NAVs, and wonder — which one is performing better? Should I switch? Am I in the wrong fund?
Half the time, neither fund was actually better. They were simply using different internal adjustments that created a completely artificial illusion of performance difference — where none existed in reality.
Moving to a single, Indian, exchange-published spot price removes that illusion permanently. Now when you see one Gold ETF clearly outperforming another over a period of time, it will mean something real — lower costs, better fund management, tighter tracking of the underlying metal. That is information you can genuinely act on as an investor.
For most retail investors, this change will not feel dramatic in day-to-day life. The gold in your ETF is the same. The fund is the same. Your SIP continues as before. But at the policy level, this is a significant and important step toward making Gold and Silver ETFs more transparent, more comparable, and more trustworthy as investment products for ordinary Indians.
As always, gold remains what it is — a long-term portfolio hedge and diversifier, not a short-term trading instrument. Whether NAVs were calculated using London prices or MCX prices, your real challenge in gold investing has always been the same: patience, not pricing methodology.
Disclaimer: This article is written purely for educational purposes and should not be considered as investment advice. Mutual Fund investments are subject to market risks. Please read all scheme-related documents carefully before investing.
Source: SEBI Circular No. HO/(68)2026-IMD-POD-2/I/5780/2026 dated February 26, 2026. Available at sebi.gov.in under Legal > Circulars.
