Gold and silver Exchange Traded Funds experienced a sharp surge on Wednesday, May 13, 2026, ending a quiet period that had lasted more than three months. According to reports, the trigger was a rise in import duties on gold and silver, which made the metals costlier to buy directly and pushed investors toward ETFs instead. The government raised import duties on both metals to 15% from 6%, marking one of the biggest hikes ever in the bullion sector. The decision has created massive turbulence in the precious metals market, leading to a historic price surge across India. Most funds in the category gained around 7% in a single session, with some crossing 8% in their performance. The renewed interest in gold ETFs comes on the back of an increase in import duties for gold, which was brought in to discourage gold purchases. Prime Minister Narendra Modi had advised citizens to reduce gold purchases in the coming year to reduce foreign exchange depletion.
The import duty hike has triggered a historic price surge in physical gold markets, with gold prices jumping by nearly ₹9,000 and silver prices surging by around ₹21,000 per kg. According to the latest reports, gold crossed ₹1.65 lakh per 10 grams while silver moved above ₹2.90 lakh per kg. The government's primary objective behind this step is to reduce pressure on India's foreign exchange reserves and curb excessive imports of precious metals. The move comes amid rising geopolitical uncertainty due to the ongoing Middle East crisis and US-Iran tensions, which are already fueling volatility in global commodity markets. Experts believe the bullion market may remain highly volatile in the coming weeks as investors react to both policy changes and international developments.
As of May 13, the combined Assets Under Management (AUM) of gold and silver ETFs stood at ₹2.9 trillion, up about 12% so far this month. According to an analysis of AUM data disclosed by fund houses on the Association of Mutual Funds in India's (AMFI's) website, gold ETF AUM rose nearly 6% to ₹1.9 trillion, while silver ETF AUM climbed around 7% to about ₹95,000 crore on Wednesday. The AUM is at its highest level since January 2026, when it had touched ₹3 trillion. The gains in AUM, largely in line with the appreciation in gold and silver ETF prices, suggest that the category saw muted net inflows or outflows despite elevated trading activity in ETF counters. Nippon India Gold ETF, the largest scheme in the category, witnessed trades worth ₹1,362 crore on Wednesday on the NSE, compared with its one-month daily average of around ₹350 crore. In the case of Nippon India Silver ETF, units worth ₹2,000 crore changed hands.
Among the nearly 20 funds in the gold ETF space, Mirae Asset emerged as one of the top performers, rising over 8% in a single day to trade at ₹146 a unit. As reported, the costliest ETF in the group was Choice Gold ETF, which traded at ₹149.5, up about 6% on the day. The Nippon India Mutual Fund's Gold ETF, the largest scheme in the category, closed 5.7% higher on the NSE. Gold ETFs, which are mutual-fund-like schemes that track gold prices, were a preferred investment option in a little more than a year as stock markets dipped. After rallying over 60% through calendar year 2025, gold prices were expected to fade, as analysts felt that the rally had peaked, but the import duty announcement has renewed interest in gold ETFs as an investment avenue. The surge in gold and silver prices following the import duty hike comes as a relief for commodity ETF investors, many of whom had invested in these schemes for the first time during the last few months of 2025 and in January 2026, when prices of the two precious metals had peaked.
The jewellery industry faces significant challenges as wedding season gold purchases just got significantly costlier following the duty hike. The ₹5 lakh crore jewellery industry warns of layoffs due to the increased costs, with smuggling expected to surge like it did in 2022. India imports 100% of its gold and pays for it in US dollars, making the country vulnerable to global price fluctuations. With the US-Iran war shutting the Strait of Hormuz, the chokepoint for approximately 50% of India's crude oil, Brent crude shot from $73 to $107 a barrel. India's forex reserves crashed by $38.5 billion in just 10 weeks, forcing the government to seek alternative measures to control imports. The move comes as India's Current Account Deficit is projected to widen to 1.3% of GDP, making gold the easiest second drain to squeeze after oil imports.
According to market watchers, the import duty hike has renewed interest in gold ETFs as a way to take exposure to the metal without direct purchase. As reported by Kotak Securities, Anindya Banerjee, Head of Commodity and Currency Research, stated that their structural view on gold and silver remains constructive. "The global de-dollarisation theme, central bank buying, and currency-debasement hedging are all multi-year drivers that operate independently of any domestic tax decision. We expect international gold to move towards $6,000 an ounce over the next 12 to 18 months, with silver positioned as a meaningful beneficiary alongside it." Analysts predict that the increase in gold prices is expected to continue to increase, with the import duty announcement having renewed interest in gold ETFs as an investment avenue.
