The important festival season with strong demand for gold in India is approaching, and local asset management institutions are restricting new investments in gold products. The exchange rate of India's domestic currency has experienced a historic decline, and the country is taking multiple measures to reduce public demand for precious metals; the actions of these asset management institutions further complement these relevant policies.
Including leading institutions such as the State Bank of India Fund Management Company and ICICI Prudential Asset Management Company, most fund managers announced on Thursday evening through their respective announcements that they would impose subscription restrictions on certain gold ETF and related products, with the new regulations taking effect on Friday.
The institution did not specify the reasons for these restrictions, but sources familiar with the matter said that the move was the result of discussions among several asset management companies, with the aim of temporarily limiting new investments in gold funds.
Insiders say that the industry hopes to prevent a surge in gold demand on the eve of the holiday season; at the same time, policymakers are working to control gold imports.
The Indian Mutual Funds Association and the market regulator, the Securities and Exchange Board of India, have not yet responded to requests for comments via email.
India is one of the largest gold consumers in the world, and during major national festivals such as Diwali at the beginning of November each year, demand for gold typically surges significantly. Earlier this year, India raised import tariffs on gold and silver to reduce the foreign exchange required for purchasing precious metals, thereby alleviating pressure on the rupee.
Indian Prime Minister Narendra Modi has repeatedly called on the public to reduce their preference for holding physical gold and to direct their savings towards financial assets that have productive value. However, the latest data shows that investors continue to flock to gold and gold-related products in order to hedge against the record depreciation of the rupee.
India's stock market performance has been the worst in Asia this year. Against the backdrop of declining stock markets, demand for gold and silver ETF has also increased accordingly. Data from the Indian Mutual Funds Association shows that despite a 20% drop in international gold prices since the outbreak of tensions between the US and Iran at the end of February, as of the end of September, the scale of India's gold ETF market still reached 1.8 trillion rupees (equivalent to 19 billion US dollars), an increase of nearly 50% compared to the beginning of 2026.
India's largest gold fund – the Japan-India Gold Fund, with an asset size of over $6 billion, achieved a yield of 9.4% this year; in contrast, India's main stock index, the S&P 500, fell by 12% during the same period.
