India changes gold valuation rules. What effects can it have on international demand and implicitly on Romania

India, one of the world's largest gold markets, has adopted a new regulation that changes the way investment funds in the country can calculate the value of gold and silver.

India changes gold valuation rules. Photo by Shutterstock

The decision was officially announced on February 26, 2026 by the Securities and Exchange Board of India (SEBI) and will take effect on April 1, 2026.

Under the new provisions, funds investing in gold and silver will be able to use spot prices on regulated exchanges in India to value their assets, not just the international reference price traditionally set through transactions in London.

Specifically, fund managers will be able to choose between the international reference price and local quotations, when the latter more accurately reflect domestic market conditions.

Link to the physical gold market

Although, at first glance, the change is aimed exclusively at investment funds, its impact may go beyond the financial sphere and be felt indirectly in the physical gold market as well. A significant part of these funds invest clients' capital in real gold bullion, stored in specialized vaults. If investor interest in such products increases, the Funds may purchase additional quantities of physical gold from international markets.

“It is important for the public to understand that although the regulation targets investment funds, they invest in actual physical gold. Higher interest from investors may generate additional global demand for gold bullion.”said gold market specialist Victor Dima.

Until now, funds in India valued gold primarily based on international prices, which did not always reflect local market realities. Amid strong domestic demand, currency fluctuations, import duties and logistics costs, physical gold traded in India can often be priced differently from global benchmarks. The new rule aims to provide investors with a more accurate and up-to-date valuation of their investments.

The impact on Romanian investors

For Romanian investors, the change will not have immediate effects on the price of gold. International quotes will remain the main benchmark for the global market. However, decisions taken in countries with such significant gold consumption as India can indirectly influence global demand for the precious metal. When large markets experience increases in capital flows to gold funds, this phenomenon can, over time, affect the demand for physical gold and its availability in international markets.

The new regulation does not create an alternative global price for gold and does not directly change international quotations. It exclusively changes the valuation methodology used by certain mutual funds in India.

“Such regulatory decisions show the growing interest in gold as a safe-haven asset, especially in times of economic uncertainty and financial market volatility“, added Victor Dima.

The Complete Guide to Investing in Gold: Physical, Digital or Stock Exchange

Romanians' interest in gold as a safe investment is growing, and more and more investors are analyzing the differences between physical gold, digital gold and gold-based ETFs.

Although all three options offer the opportunity to invest in this precious metal, they differ significantly in terms of regulation, taxation, liquidity and investor protection.

Thus, physical investment gold remains the only category covered by a clear legal framework in Romania. Emergency Ordinance 190/2000 sets purity standards for bullion and coins, and European regulations ensure VAT exemption and apply capital gains tax only to sales at a profit. As a result, it is the only form of investment in gold that enjoys full and explicit legal protection domestically.

Digital gold, often purchased through international platforms, has become more accessible, but it is not regulated in Romania as a distinct financial product.

This is usually a claim on gold held by a third-party custodian, but there are no local standards for transparency or allocation of gold, and the quality of the audit and legal safeguards are entirely dependent on the foreign jurisdiction in which the platform operates. Profits are taxed as digital asset income at a rate of 10% upon realization, and investors must assess the credibility of each provider for themselves.

Gold ETFs are another option for Romanian investors who trade through authorized international brokers. While there are no locally issued gold ETFs, access to major global products such as GLD or IAU is straightforward. These instruments stand out for their high liquidity, relatively low costs and legal protection at European level, thus being an increasingly relevant option for those looking for exposure to gold through the financial markets.

The differences that Romanian investors should consider

International trends also confirm the growing interest in gold-backed financial products. The World Gold Council's latest monthly report shows that in October 2025, gold ETFs recorded positive global inflows of $8.2 billion, marking the fifth consecutive month of positive demand. Total assets under management globally reached $503 billion and the amount of physical gold held by ETFs increased to 3,893 tonnes, highlighting the continued appeal of gold to investors around the world.

As interest in gold continues to grow, the differences between these three categories become increasingly important. For Romanian investors, physical gold offers legislative clarity, gold ETFs ensure efficient access through global markets, and digital gold remains an option that requires a careful analysis of the issuer and its guarantees. Making informed decisions is essential to successfully navigate the ever-evolving financial landscape in Romania.

Investment gold vs jewelery – different tax regimes

Although both are made of gold, jewelry and investment gold differ fundamentally in purpose and financial logic.

Jewelry typically incorporates additional costs related to design, craftsmanship, branding, and possible gemstones, resulting in higher purchase prices that are rarely reflected in resale value. Liquidity is limited and prices often do not reflect the actual value of the metal.

Investment gold, on the other hand, is designed to preserve value, diversify your portfolio and protect against inflation. Bullion and coins are primarily valued based on purity, weight and international price, making them highly liquid and predictable. According to EU legislation applied in Romania, qualified investment gold is fully exempt from VAT, while jewelery is subject to a 21% tax.

Romania applies the EU Investment Gold Directive, which means that intra-EU sales, imports and purchases of qualified products are exempt from VAT. For individuals, capital gains tax only applies if there is a profit on resale, usually according to the income tax rate, which is currently 10%. The inheritance of gold, in its direct form, is not subject to taxation, if the legal procedures are followed.

In other European states, approaches differ: Switzerland exempts capital gains from privately held physical gold, and the United Kingdom exempts certain legal tender coins. However, the VAT exemption is applied uniformly throughout the European Union, giving investment gold a competitive advantage over jewelery and other asset classes.

Trends on the Romanian market

Although Romania has not traditionally been a mature market for gold investments, demand has steadily increased in recent years. Tavex specialists report increasing demand from both first-time buyers and experienced investors looking to rebalance their portfolios amid economic uncertainty.

Smaller bars (1g, 5g, 10g) and one-ounce coins are popular due to affordability and liquidity, while large bars appeal to investors with larger budgets due to the lower premium per gram. Bullion is often preferred over coins for their certification and packaging, although both are internationally recognized and easily traded.