Following a regulatory nudge ahead of a seasonal spike in demand, several mutual fund houses, including HDFC, Kotak, ICICI Prudential, Nippon, Tata, UTI and Birla, have temporarily suspended fresh lump-sum investments, switch-ins and new SIP registrations in their gold and gold-silver exchange-traded fund (ETF) fund-of-funds (FoFs) from Friday.
While several fund houses issued public notices announcing the restrictions, none explicitly cited the reasons. However, industry and Association of Mutual Funds in India (Amfi) sources told TNIE that the move followed regulatory advice amid expectations of a surge in gold and silver demand during the upcoming festive and wedding seasons.
The restrictions vary across fund houses and schemes. While some have suspended fresh lump-sum investments, switch-ins and new systematic investment plan (SIP) and systematic transfer plan (STP) registrations, others have directly informed investors about the curbs.
Existing investments, ongoing SIPs and units already purchased will remain unaffected. Investors can continue to hold their investments or redeem their units, as usual.
The restrictions apply specifically to gold and silver ETF fund-of-funds, which invest in the underlying ETFs. They do not cover direct investments in gold and silver ETFs traded on the NSE and BSE through demat accounts.
The move is aimed at moderating the surge in investment demand for precious metals, which could add to gold and silver imports and put further pressure on the rupee and India's trade balance. The decision follows informal discussions and guidance involving mutual fund houses, Amfi and the Securities and Exchange Board of India (Sebi), the sources said.
The curbs come ahead of several festivals and the busy wedding season, when demand for precious metals typically rises. Similar restrictions were imposed in June this year.
The latest move comes amid elevated crude oil prices, heavy foreign portfolio investor outflows from Indian equities and high gold imports, all of which have added to pressure on the rupee and the country's external balances. Data from the National Securities Depository Ltd (NSDL) show that foreign investors have withdrawn Rs 3.08 lakh crore from Indian equities so far in the current financial year through the second week of October, more than twice the total outflow recorded during the whole of the previous financial year.
Inflows into gold ETFs surged during the last festive season as investors turned to the yellow metal amid lacklustre stock market returns. Silver ETFs have also attracted strong interest, particularly after the government discontinued the sovereign gold bond scheme in February 2024.
Net inflows into gold ETFs rose from Rs 9,225 crore in 2024 to Rs 42,961 crore in 2025, according to industry data.
The momentum has continued this year. Gold ETFs attracted net inflows of Rs 45,926 crore between January and September 2026, despite outflows in May. January alone accounted for Rs 24,040 crore, followed by Rs 5,255 crore in February and Rs 2,266 crore in March.
India is the world's largest consumer of silver and the second-largest consumer of gold, with more than 95% of its requirements for both metals met through imports. A surge in precious-metal imports can widen the trade deficit and increase pressure on the rupee.
Gold imports, however, eased to $1.8 billion in September from $2.3 billion in August, according to the latest trade data. Imports could come under renewed pressure in October and November, when festivals and weddings typically drive up demand.
