Physical gold and silver holdings must now be valued off exchange-polled spot prices
Mutual funds holding physical gold or silver (as in Gold/Silver ETFs) must value those holdings using the polled spot prices published by recognized stock exchanges — the same prices used to settle physically-delivered gold/silver derivatives contracts — under a spot-polling mechanism SEBI specifies from time to time.
“The mutual funds shall value physical Gold and Silver by using the polled spot prices published by the recognized stock exchanges which are used for settlement of physically delivered Gold and Silver derivatives contracts. The spot polling mechanism shall comply with the spot polling guidelines as specified by the Board from time to time.”
When a client asks why a Gold ETF's NAV moved differently overnight than the local jeweller's gold rate, the distributor can explain the scheme values its holdings against the exchange's polled spot price used to settle gold derivatives contracts, not retail bullion prices — so small short-term gaps between the two are expected, not a pricing error.
Illustrative scenario written by Northspread — not text from the circular itself.