New Delhi: Several Mutual Fund houses, including HDFC Mutual Fund, Tata Mutual Fund, ICICI Prudential Asset Management Company, Aditya Birla Sun Life, DSP and Invesco India restricted new investments in their gold fund-of-funds (FoFs). The decision has startled many people as during the festive season Indians rush to buy gold.

The fund houses have not given any reason for the prohibition of investment in Gold ETFs. However, investors are allowed to redeem their existing investments.

Tata Mutual Fund has temporarily suspended new Systematic Investment Plan (SIP), additional lump sum investments, switch-ins, top-ups, and Systematic Transfer Plan (STP) registrations from October 16. 

“Furthermore, installments under existing SIP/STP registrations (which were made before the effective date) will continue and will be processed at the applicable NAV,” the fund house stated in its release.

It is being said that the particular transactions have been stopped to avoid a rush into gold FoFs during the festive season.

According to Association of Mutual Funds in India (AMFI), Rs 4,450.61 crore was pumped in Gold Exchange-Traded Funds in September 2026, as compared to Rs 2,596.70 crore in August 2026.

Gold ETFs are mutual funds in which gold can be invested in an abstract manner but no physical gold is to be seen. They come in the shape of the existing price of gold and are easily exchangeable in the share market like equity shares.

Gold mutual funds have an investment in gold mining stocks and gold stock shares but not gold. Gold mutual funds enable the investor to invest in gold without considering the problem of storage and safety risk.

The Mutual Fund houses temporarily halted the new investments in their gold fund-of-funds at a time when the Rupee has fallen nearly 7% in 2026 so far.

The fall of the Indian currency against the US Dollar has increased India’s import bill. Also, foreign investors have been relentlessly selling equities in the domestic market. 

Importantly, India is the second most consumer of Gold after China. The country imports approximately 700-900 tonnes of gold annually.

In September 2026, India’s gold imports declined to $1.8 billion from $2.3 billion. 

Gold demand rises in India during the festive and wedding season, as people buy gold on Dhanteras and for marriage purposes.

At the international level, Gold today held around $4,150 per ounce on Friday following a rebound in the previous session, supported by a recent equities selloff that boosted safe-haven demand for precious metals and government bonds. This shift pushed bond yields sharply lower, reducing pressure on non-yielding assets.