Before judging whether an Indian gold or silver fund is tracking its metal properly, we need to check which price it uses to value that metal.
Since April 1, 2026, SEBI has required mutual funds to value physical gold and silver using exchange-published polled spot prices—the references used to settle physically delivered gold and silver derivatives contracts on recognised exchanges. The requirement appears in its February 26 circular.
“Polled” is a useful detail. This is a prescribed spot-price reference, rather than permission to select any convenient domestic quotation.
Previously, gold and silver ETFs started with London’s LBMA morning benchmark prices. Those prices were then adjusted for currency and unit conversions, transportation, customs duties, taxes and a notional domestic premium or discount.
Domestic conditions were already part of the calculation. The change replaces that adjusted international starting point with a regulated domestic reference. SEBI’s stated objectives are valuations that reflect domestic conditions and greater consistency across funds.
For us, the practical consequence concerns how investors assess performance.
A dollar gold quotation and an Indian fund’s reported asset value measure different things. Currency movements, local pricing and valuation timing can affect the comparison. Differences between Indian and international metal prices therefore need to be understood before a gap is attributed to poor fund management.
There is also a separate comparison: the ETF’s traded share price against its reported asset value. That is the premium or discount to NAV, which depends partly on how the underlying holdings are valued.
Our reading is that comparisons spanning the April change deserve a methodology check before drawing conclusions about tracking quality. The circular changes the valuation reference; it does not, by itself, establish that a fund bought additional metal.
The first question when a fund appears to lag gold is therefore straightforward: lagging which reference, in which currency, and at what time?
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