Gold FoFs halt fresh investments, but silver mutual funds remain open: Experts decode the reasons and explain what to do

Investors can gain exposure to gold and silver through exchange-traded funds (ETFs), fund of funds (FoFs), and FOFs combining both metals. While ETFs trade on stock exchanges like shares and are backed by physical metal, FoFs invest in underlying ETFs and are priced at the end of the day.

Following notices issued on 15 October 2026, several mutual fund houses have restricted fresh investments in gold FoFs and gold-silver FoFs, while gold ETFs, silver ETFs and FoFs remain open. Existing registered SIPs and STPs generally continue, while redemptions remain available.

The experts suggest that the move aims to curb gold imports and explain what investors should do.

Why are gold FoFs being restricted while silver funds remain open?

Harsh Vardhan Dawar, ACA, CFA, FRM, Founder of Wealth Cafe, said the restrictions align with the government's efforts to discourage gold investment and to offset some of the excess demand for physical gold as a result of the current festive season of Dussehra and Diwali, which also marks the wedding season of the year.

Eshaan Lazarus, Founder and CEO of 021 Trade, said gold has a greater impact on India's import bill. In FY2025-26, gold imports stood at about $72 billion against $12 billion for silver. During April-September 2026, gold imports were $19.27 billion and silver imports $2.40 billion, both lower year-on-year, partly following the May increase in import duty from 6% to 15%.

Harsh Soni, Founder of NYVO Money, pointed to additional pressures, including rupee depreciation and Brent crude prices remaining above $105 a barrel. While oil imports are essential, gold imports can be curbed to ease pressure on the country's external balances.

“Restricting silver imports would hit manufacturing demand, not just investment demand. Silver has no cultural buying surge comparable to gold's Dhanteras peak,” Soni added.

“If silver inflows swell sharply, the same logic could be applied. For now, the difference comes down to size, import impact and the festive timing that put gold in focus first,” Harsha Vardhana VM, Founder-Group CEO, Atom Financial Services, added.