Gold and silver ETF Investors Could Be Hit by New SEBI Move
India’s precious metals investment segment may soon see regulatory changes. The market regulator Securities and Exchange Board of India has released updated proposals after unusual price swings shook investors in recent weeks. The discussion centres around the functioning of Gold and Silver ETF trading and how exchanges calculate price movement limits.
This update is important for investors because ETF means not physical metals — it is digital investment in simple words. An ETF is a mutual fund scheme that invests in securities in the same proportion as an index, and its units are mandatorily listed and traded on an exchange platform.
Today’s Gold & Silver Prices
Gold (24K): ~₹1,57,000 per 10 grams
Silver: ~₹2,45,000 per kg
(Indicative bullion rates — may vary by city and trading session timing)
Why Gold and Silver ETF Rules Needed a Review
During heightened volatility in gold and silver prices in late January 2026, price bands based on T-2 NAV proved inadequate to maintain alignment with underlying asset values.
As an interim measure, exchanges used T-1 Day closing NAV/closing price as the base price for Gold and Silver ETF when operationally feasible.
Currently, exchanges apply a fixed price band of up to 20% on the base price of ETFs, except for Overnight ETFs investing in TREPs, which have a tighter 5% band.
New Proposed Price Band Structure
Under the proposal, equity and debt index ETFs will have an initial price band of ±10%, which may be flexed up to ±20%.
For Gold and Silver ETF, the initial band would be 6%, which can be gradually expanded in stages of 3% after a cooling-off period, up to a maximum of 20%.
If international price movements exceed the aggregate daily price limit of 9% applicable to commodity derivatives, exchanges may relax the band further in stages.
Consultation Paper Issued — Public Comments Invited
The regulator has issued a seven-page consultation paper titled:
“Consultation Paper on Review of provisions related to Base Price and Price Bands for Exchange Traded Funds (ETFs)”
The paper evaluates the current mechanism for determining base price and the applicability of price bands, and invites public comments on the proposed changes.
In the consultation paper issued on February 13, the regulator said it is reviewing the provisions related to base price and price bands for ETFs and has invited public comments by March 6.
ETFs, which mirror indices or commodities such as gold and silver, are traded on stock exchanges like individual shares.
Main Objective — Control Volatility
The suggestion is supposed to curb soaring prices and maintain smooth trading in the segment, as per regulatory discussions mentioned in the report.
Efforts are focused on addressing recent incidents of increased volatility in precious metal ETFs, especially on days when trading volume is low and during market holidays.
These situations created mismatch between ETF prices and actual metal value — a key concern for investors in Gold and Silver ETF.
What It Means for Investors
The relocation is based on recent incidences of increased volatility in precious metal ETFs. Regulators believe tighter and flexible price bands can prevent panic movements while still allowing genuine market discovery.
The feedback from stakeholders will be considered before final regulatory amendments are finalised.
Hoping that this updated information will help viewers make the right investment decisions. The regulator is also trying to solve investor problems by giving proposals and encouraging participation.
The new framework aims to create smoother trading, reduce sudden price spikes, and ensure ETF prices stay closer to real metal value. If approved, these changes could significantly impact trading behaviour in Gold and Silver ETF and may make the segment safer for retail investors.
Investors should keep watching updates because public feedback may influence the final rules.
Would you invest more in Gold and Silver ETF after these proposed changes — or wait and watch? Tell us below.
Disclaimer: This article is published for informational purposes only. Readers are advised to verify details from official sources before making any decisions. The website is not responsible for any loss or damage arising from the use of this information.
