SEBI Tightens Valuation of Physical Gold and Silver Held by Mutual Fund Schemes — Feb 2026 Circular Explained

Mutual fund investors who hold gold and silver through exchange-traded funds woke up on 26 February 2026 to a quietly important rule change. On that date the Securities and Exchange Board of India issued circular number HO/(68)2026-IMD-POD-2/I/5780/2026, titled "Valuation of physical Gold and Silver held by mutual fund schemes", reworking the way fund houses must value the bullion sitting inside their schemes. It is the kind of regulatory housekeeping that never makes a ticker flash red, yet it touches the daily net asset value at which every gold and silver fund unit is bought and sold.

For the pre-open desk this is a structural story rather than a level story. There is no single index print to react to; instead, the framework that converts a kilogram of vaulted metal into a per-unit price has been tightened, with effect flowing into the ETF and commodity-fund segment. Below we set out what the 26 February 2026 circular addresses, what moved in the gold-fund space in the run-up to it, and what investors should watch today, alongside the verified policy numbers that frame the gold trade.

Market Snapshot

The instrument at the centre of the 26 February 2026 circular is not an index but a methodology: how a scheme values the physical gold and silver it holds before striking its NAV. Because Oquilia publishes only source-verified numbers, we are not quoting projected bullion prices or NAV figures here; the bullion price, the applicable customs duty and the rupee all move every session, and the circular itself is the authoritative reference for the exact steps. The valuation framework is the news, and the table below captures the circular at a glance.

What sits behind the headline is the broader macro backdrop for gold. The Reserve Bank of India held its repo rate at 5.25% on 8 April 2026, the second consecutive pause after the cumulative 125 basis points of cuts delivered through 2025, according to the RBI Monetary Policy Committee resolution. Real interest rates and the rupee are two of the largest drivers of domestic bullion, so a steady-rate environment keeps the carrying-cost argument for gold broadly unchanged into the 3-5 June 2026 policy review. Investors modelling a gold or equity allocation can stress-test contributions using the Oquilia lump-sum calculator rather than guessing at NAV.

The verified reference numbers that matter for anyone holding gold or silver through a fund are set out below. Each is drawn from a primary source rather than an estimate.

What Moved Yesterday

The gold and silver fund category did not need a fresh price shock on 26 February 2026 to be in focus; the circular itself was the catalyst, redirecting attention to how transparently schemes value their underlying metal. For context on flows, AMFI data showed systematic investment plan contributions touching Rs 30,954 crore in May 2026, a record that underlines how much retail money now arrives through automated monthly plans rather than tactical lump sums, as covered in our report on the May 2026 AMFI SIP numbers. A slice of that flow goes into gold and silver ETFs, which is precisely why the valuation framework matters at scale.

Commodity-linked schemes behave differently from equity funds, and the distinction is worth restating before today's open. A gold ETF's tracking error against physical gold depends partly on how the underlying metal is valued each day; a tighter, more standardised valuation rule, of the sort SEBI codified on 26 February 2026, narrows the scope for divergence between two schemes holding identical bullion. For an investor comparing two gold ETFs on 26 February 2026, that means valuation methodology is less likely to explain a performance gap, leaving cost and liquidity as the cleaner differentiators.

The other moving part yesterday was the cost lens. The expense ratio a fund house charges on a gold or silver ETF is a recurring drag regardless of how the metal is valued, so the valuation circular dated 26 February 2026 does not change the fee maths. What it does change is confidence that two schemes are marking the same asset to the same yardstick, which is a quiet win for the SEBI-regulated transparency that retail buyers depend on.

What to Watch Today

The first item on the watchlist is procedural: read the circular at source. SEBI's 26 February 2026 document on the valuation of physical gold and silver is published in full on sebi.gov.in, and any investor or distributor who wants the precise valuation steps, effective dates and disclosure obligations should rely on that text rather than on summaries. Asset management companies will operationalise the framework through their scheme documents, so addenda and revised valuation policies are the practical signals to look for in the days following 26 February 2026.

The second item is the tax overlay, because valuation and taxation are separate questions that investors routinely conflate. Under the Budget 2024 regime, long-term capital gain on physical gold acquired on or after 23 July 2024 is taxed at 12.5% without indexation, while gold acquired before that date can use the grandfathered 20%-with-indexation route. These rates, drawn from the Income Tax Act provisions effective 23 July 2024, are unaffected by how a fund values its metal; the valuation circular dated 26 February 2026 governs NAV, not your tax slip. Anyone planning a redemption should confirm their holding period before booking gains.

The third item is the substitution effect in the gold-exposure menu. The RBI has not issued a fresh Sovereign Gold Bond tranche since February 2024, which has pushed more first-time gold buyers towards ETFs and fund-of-funds as the regulated route to bullion. That migration is exactly why a valuation framework tightened on 26 February 2026 carries more weight in 2026 than it might have a few years ago, when the SGB window was open and competing for the same allocation.

Finally, watch the macro calendar. With the RBI on hold at 5.25% as of 8 April 2026 and the next Monetary Policy Committee review set for 3-5 June 2026, the rate backdrop for gold is stable in the near term. For investors who would rather automate than time the metal, a disciplined monthly contribution remains the textbook approach; the Oquilia step-up SIP calculator and the core SIP calculator let you model rising contributions against a target corpus without making a single forecast about where the gold price goes next.

The practical takeaway before the open is measured. The 26 February 2026 circular is a transparency and standardisation upgrade for the gold and silver fund segment, not a trading trigger. It tells investors that the metal inside their ETF is being valued to a tighter SEBI yardstick, it leaves Budget 2024 capital-gains rates of 12.5% and 20% untouched, and it sits against a steady 5.25% repo backdrop. None of that argues for reshuffling a portfolio at the bell; it argues for reading the source document and continuing whatever systematic plan you already run.

FAQ

What does the SEBI gold and silver valuation circular dated 26 February 2026 change?

SEBI circular HO/(68)2026-IMD-POD-2/I/5780/2026 dated 26 February 2026 sets out how mutual fund schemes must value the physical gold and silver they hold. The valuation feeds directly into the daily NAV of gold ETFs, silver ETFs, gold fund-of-funds and multi-asset schemes, so the framework determines the price at which investors transact.

Will gold ETF NAVs change because of the circular?

The circular governs the methodology used to value the underlying bullion, which is one input into NAV. Read the full SEBI circular dated 26 February 2026 for the exact valuation steps; Oquilia does not publish projected NAV figures because the bullion price, customs duty and rupee rate move daily.

How is long-term capital gain on physical gold taxed in 2026?

Under Budget 2024, physical gold acquired on or after 23 July 2024 attracts long-term capital gains tax at 12.5% without indexation. Gold acquired before 23 July 2024 can be taxed at 20% with indexation under the grandfathered rule. Verify your holding period against the Income Tax Act before filing.

Are Sovereign Gold Bonds still being issued in 2026?

No. The RBI has not issued any fresh Sovereign Gold Bond tranche since February 2024. Investors seeking gold exposure through mutual funds rely on gold ETFs and gold fund-of-funds, whose NAVs are governed by the SEBI valuation framework updated on 26 February 2026.

What is the RBI repo rate as of the April 2026 policy?

The RBI Monetary Policy Committee held the repo rate at 5.25% on 8 April 2026, the second consecutive pause. This matters for gold because real interest rates and the rupee influence domestic bullion prices that feed mutual fund NAVs. The next MPC review is scheduled for 3-5 June 2026.

How should a retail investor use this circular before the open?

Treat it as a transparency upgrade rather than a trading signal. If you invest in gold or silver ETFs through a systematic plan, the 26 February 2026 framework only changes how the underlying metal is valued, not your contribution plan. Use a SIP calculator to model contributions rather than timing the NAV.

Does the circular cover silver ETFs as well as gold?

Yes. The 26 February 2026 circular is titled "Valuation of physical Gold and Silver held by mutual fund schemes", so it applies to silver ETFs and silver fund-of-funds alongside gold schemes. Both rely on the valued physical metal to compute daily NAV.