Gold has come well off its peak just as the festive season begins. The shift is that Indians may invest in gold, rather than chasing the price.
The gold price today is hovering near ₹1.48 lakh per 10 grams, about 16% below its record, as households get ready for Dussehra, Dhanteras and the wedding season. For buyers, cheaper metal is only part of the picture. Over the past week, authorities shut one of the main routes into gold investment and proposed a larger policy change.
Gold price today: where rates stand
Ten grams of 24-carat gold cost about ₹1,48,040 in most cities on Monday, up ₹600 a day before Dussehra. On MCX, December gold futures rose 0.33% to ₹1,48,413 per 10 grams. Silver gained 0.57% to ₹2,12,381 a kilogram.
Jewellers use 22-carat gold, which is about 91.6% pure, so buyers pay a lower rate. Large jewellers were charging about ₹13,570 a gram, or roughly ₹1.36 lakh per 10 grams.
Domestic futures are about 16% below their record of ₹1,77,590 per 10 grams. Globally, the drop has been bigger. Spot gold is near $4,165 an ounce, about 25% below January’s peak of roughly $5,595. The smaller fall in India is down to the weak rupee, which makes every imported ounce cost more.
Fund houses shut a popular route
About 17 mutual fund houses, including HDFC, ICICI Prudential, Kotak, Tata, Axis and DSP, stopped taking fresh money into their gold ETF fund-of-funds from 15–16 October. These schemes let investors buy gold ETF units without a demat account, through an ordinary mutual fund.
The platform blocks lump-sum investments, switches, and new SIP registrations. Existing SIPs and redemptions continue, and investors can still buy gold ETFs directly on the exchange. None of the fund houses has explained the move. A notice reportedly cited SEBI directions, while the regulator has not publicly confirmed them.
The timing matters. Fund-of-funds supply much money to gold ETFs, while issuers back most ETF units with physical gold. Closing this route just before the festive peak reduces demand for imported metal when it is normally at its highest.
The RBI’s paper-gold proposal
A bigger change may follow. The RBI has suggested to the finance ministry that gold ETFs stop buying physical gold and invest instead in tradable gold receipts issued by the central bank. The central bank would redeem these receipts in rupees and keep track of the gold price.
Under the proposal, existing gold ETF schemes would be replaced with new ones. The RBI would import and hold gold itself to meet redemptions. The aim is to reduce gold imports. The proposal has not been implemented.
The reasoning is simple. Savers moving from jewellery to ETFs still create demand for imported gold. If the RBI holds the metal and issues receipts against it, the central bank decides how much gold is imported and when. Investors would still earn returns linked to the gold price.
The trade-off is trust. Investors would hold a promise from the central bank instead of metal held for them in a vault. For a product whose appeal is being as good as gold, that is a meaningful change.
A shift already under way
Indians had already started buying gold differently. Gold ETFs held about 121 tonnes of metal worth roughly ₹1.91 lakh crore in August, with inflows of $4.22 billion so far this year. Gold imports, meanwhile, fell to $2.3 billion in August, down 58% from a year earlier, as more households exchanged old jewellery for new.
Older paper-gold products have paid off well. Holders of the 2020-21 Series VII Sovereign Gold Bond can redeem early at ₹14,614 per unit, nearly three times what they paid in October 2020, plus 2.5% annual interest.
Physical buying is also picking up again. Last week, gold in India traded above the international price for the first time in more than three months, a sign that the price fall has brought jewellery shoppers back.
What to watch
Markets are closed on Tuesday for Dussehra. Before Dhanteras on 6 November, three things will matter most.
The first is whether the finance ministry acts on the RBI’s proposal. The second is when fund houses reopen their gold fund-of-funds, and whether they explain the pause. The third is US interest rates. Traders largely expect the Federal Reserve to hold this month, but price in about a 90% chance of a hike in December.
There is also a risk that the curbs backfire. If the gold price today keeps drawing buyers and ETF routes stay restricted, more money may go into coins and jewellery, which would raise the very imports these measures are meant to reduce.
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