Stuck with losses in Gold, Silver ETFs? Here's what investors should do

Gold and Silver exchange traded funds (ETFs) experienced a major downturn on Sunday, February 1, 2026, triggered by a massive correction in precious metals in both domestic and international markets. This slump follows a period of record-high prices, marking a sharp reversal for investors.

Gold ETFs bear the brunt

The record rout in gold and silver prices hit related ETFs between 3 per cent and 17 per cent on February 1.

 

Among individual Silver ETFs, Bandhan Silver ETF plummeted 19 per cent during Sunday’s special trading session on account of the Union Budget presentation. 

 

That apart, Mirae Asset Silver ETF dropped 16.8 per cent on the NSE.

 

This follows a sharp 9-per cent crash (to ₹2,65,652 per kg) in MCX silver futures today, which dropped approximately 26.5 per cent to settle at ₹2.91 lakh per kg on Friday.

 

Gold ETFs also slid significantly. BNP Paribas Mutual Fund’s Baroda BNP Paribas Gold ETF plummeted 16 per cent, while Edelweiss Gold ETF tanked 15.9 per cent.

 

Motilal Oswal Gold ETF, ICICI Prudential Gold ETF, Tata Mutual Fund Tata Gold Exchange Traded Fund, LIC MF Gold, Aditya Birla Sun Life Gold ETF, Zerodha Gold ETF, Groww Gold ETF, Angel One Gold ETF, and UTI Gold Exchange Traded Fund crashed between 12 per cent and 15 per cent. 

 

This comes on the heels of a historic 12 per cent single-day drop on Friday, where prices fell to roughly ₹1.49 lakh per 10 grams—a far cry from the peak of ₹1.80 lakh seen just days prior.

 

MCX Gold futures, too, shed, 8.8 per cent today, hitting a low of ₹1,38,894/10 grams.  ALSO READ | MCX shares tank 15% in trade; here's why investors are dumping the stock

Will Gold, Silver prices fall more?

According to analysts, MCX Gold futures have witnessed a sharp rejection from the ₹1,80,000–₹1,81,000 zone, followed by an aggressive breakdown, confirming short-term trend exhaustion after a parabolic rally. The price, they said, has slipped back toward the ₹1,36,000 level, indicating heavy profit booking and long liquidation.  "The rising channel support has been decisively tested, and momentum has shifted into sell-on-rise mode. Immediate stability is required above ₹1,32,000–₹1,35,000 to avoid further downside extension. Until price regains ₹1,45,000, rallies are likely to face supply, keeping the near-term outlook cautious to corrective," said Ponmudi R, CEO, Enrich Money.

 

For Silver, momentum indicators have flipped from extreme overbought to oversold within a very short span, highlighting structural instability rather than healthy correction.  "The ₹2,60,000–₹2,55,000 zone is now a critical demand area; failure to hold may open deeper corrective risk. Any pullback toward ₹3,00,000–₹3,10,000 is expected to attract selling pressure. The trend remains bearish-biased in the short term, with volatility expected to stay elevated," he said.

Hit by losses in Gold, Silver ETFs? Here’s what investors could do:

When gold or silver ETFs hit their "lower circuit" on the stock exchange, liquidity usually dries up because there are many sellers but no buyers at the fixed price floor. Investors, unable to sell their units in the open market, may refer to these guidelines laid down by market regulator Securities and Exchange Board of India (Sebi), providing alternatives.

1. Direct redemption with the AMC

Standard exchange trading happens between investors. However, Sebi regulations allow investors to bypass the stock exchange and go directly to the Asset Management Company (AMC) under specific "liquidity windows." 

Investors may choose this option if their ETF units are trading at a significant discount to the Net Asset Value (NAV) or if there are no buyers on the exchange (e.g., during a circuit filter hit). 

Here, investors can put in a redemption request directly with the fund house. The AMC will cancel your units and pay out the value based on the day's actual NAV of the underlying metal. 

Notably, while large institutional investors (Authorized Participants) do this regularly in "basket sizes," retail investors are also permitted to approach the AMC directly during periods of low liquidity or when the exchange price deviates significantly from the NAV. 

"If investors want to redeem their silver units, a better way to do would be to go to an AMC, especially if they were buying silver as a speculative bet. However, if they were trying to buy silver as a long-term precious metal exposure, then investors just need to handle this rout calmly by taking a decision on the basis of their asset allocation and how much they really want to have as exposure to silver," said Vishal Dhawan, founder, Plan Ahead Wealth Advisors.

2. Market orders vs limit orders

Investors should avoid placing ‘market orders’ during circuit hits as it might not execute at all, or it might execute at an unfavorable price the moment the circuit resets.  Instead, investors may use ‘limit orders’ and wait to see if any buyers enter the market later in the session.

3) Square off leveraged trades

Investors, who used leverage to trade in silver, should try to square off/close their positions given the sharp drawdown in the prices.  

"This type of commodity exposes investors to this kind of risk. And therefore, investors should try to close off their positions as quickly as possible. However, investors who are using ETFs or fund of funds (FoFs) to build this exposure are better off in this market," Dhawan said.