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India Opens Equity Funds to Gold and Silver - Up to 35%
India’s securities regulator now permits equity mutual funds to allocate up to 35% of assets to gold and silver, potentially channelling tens of billions into precious metals markets.
What to know
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India’s SEBI now allows equity-oriented mutual funds to allocate up to 35% of assets to gold and silver, a sharp departure from previous rules that restricted such exposure.
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Gold is trading at $5,191/oz and silver at $86.42/oz, with both metals posting weekly gains of 2.48% and 5.80% respectively.
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India’s mutual fund industry manages over $800 billion in assets - even a 5–10% allocation to precious metals would represent substantial new demand.
What happened
The Securities and Exchange Board of India (SEBI) now allows equity-oriented mutual funds to allocate up to 35% of their portfolios to gold and silver. Previously, precious metals exposure was largely confined to dedicated commodity or gold-specific funds.
India’s mutual fund industry has assets under management exceeding $800 billion. If fund managers allocate even 5–10% rather than the full 35%, the capital flows into gold and silver would be substantial.
Gold sits at $5,191/oz, up 2.48% on the week and 2.36% over the past month. Silver has climbed 5.80% week-on-week to $86.42/oz. The gold/silver ratio has compressed to 60.1.
Who benefits
India’s largest fund houses - SBI Mutual Fund, HDFC AMC, ICICI Prudential - collectively manage hundreds of billions in equity-oriented schemes. Portfolio managers who previously had no mandate to hold gold or silver now have explicit regulatory permission.
India is already the world’s second-largest consumer of physical gold. This rule change layers institutional demand on top of the country’s existing appetite for the metal. Indian households hold an estimated 25,000 tonnes of gold - more than the reserves of the US Federal Reserve and the ECB combined.
Silver may benefit disproportionately. India is the world’s largest importer of silver, and the inclusion of silver alongside gold gives fund managers a way to express a precious metals view through the cheaper, more volatile metal.
Why it matters
Regulatory changes of this magnitude tend to produce slow-building but durable effects. When China opened its gold market to domestic investors in the early 2000s, it took years for the full impact to materialise - but it permanently altered global gold flows.
The move comes as gold contends with US CPI data due today, which could influence the Federal Reserve’s rate trajectory and the opportunity cost of holding non-yielding assets. A softer inflation print could support metals by bringing rate cuts closer, while a hot number might test gold’s resilience near $5,200.
What happens next
The key metric is uptake speed - how quickly Indian fund managers begin exercising their new allocation powers. Early adopters will likely start with modest gold positions of 5–10%, but competitive dynamics could push allocations higher.
Indian gold and silver import data over the next two quarters will provide the first tangible evidence of institutional buying. Silver imports could spike, given India’s existing infrastructure for physical delivery. Today’s US CPI release will drive immediate price action, but the structural question is whether India’s fund managers treat this as permission or mandate.
This article is for informational purposes only and does not constitute financial advice. Always do your own research before making investment decisions.
