Gold, silver ETFs log biggest single-day fall as prices crash 10-20%
Gold and silver ETFs in India logged their steepest single-day fall as global precious metal prices retreated sharply after a strong rally
 "Gold, silver ETFs log biggest single-day fall as prices crash 10-20%")
Gold and silver exchange traded funds (ETFs) in India witnessed their biggest single-day decline on Friday as precious metal prices eased after a steep rally in recent months.
Nippon India gold ETF, the largest in the category, tumbled 10.1 per cent on the National Stock Exchange (NSE). This is the highest single-day decline for the scheme which was launched in 2007.
The HDFC and ICICI Prudential gold ETFs, the other popular offerings, were down 8.8 per cent and 9.5 per cent on the NSE, respectively.
The fall in domestic ETFs followed the selloff in precious metals globally on Friday.
Spot gold prices declined as much as 8 per cent during the day to go below $5,000 an ounce. However, gold later recovered some of the losses.
The fall was sharper in the case of silver ETFs. Most of the schemes ended the session down over 20 per cent. In the global market, spot silver prices plunged over 17 per cent intraday to a low of $95 an ounce.
According to experts, the slump in precious metal prices can be partly attributed to a strengthening dollar, ahead of US President Donald Trump’s announcement of Kevin Warsh as his nominee for Federal Reserve chair. The announcement eases uncertainty around the US monetary policy.
Profit booking, among other factors, accelerated the fall, they said.
"The main reason for the selloff was the strengthening of the US dollar, which rose by about 0.30 per cent, putting pressure on gold and silver prices. Investors also felt that the recent rally was stretched and unsustainable, leading to profit-booking at higher levels. In addition, weakness in the equity market triggered selling across other asset classes, including gold and silver," said Satish Dondapati, Fund Manager, Kotak Mutual Fund.
Manav Modi, Commodities Analyst at Motilal Oswal Financial Services, said that while the fundamentals behind the rally in precious metals remain intact, investors should take a cautious approach when investing in gold and silver ETFs.
"Caution is what we are advising our clients amid the volatility. Once there is clarity and stability in prices, investors can trade depending on the price trajectory," he said.
Despite the pull back, spot gold prices are up around 17 per cent in dollar terms, the sharpest monthly gain since 1980. Silver prices are up nearly 40 per cent this month.
Silver futures slip 22%; gold follows suit
Silver futures on the MCX plunged about 22 per cent on Friday, retreating from a Thursday peak near ₹4.2 lakh per kg to around ₹3.27 lakh, erasing in a day nearly all gains from the previous 10 days. Gold also slid sharply.
The February MCX gold contract fell from a record intraday high of about ₹1,80,779 per 10 grams to a low near ₹1,54,157.
Globally, spot gold dropped as much as 8 per cent, briefly slipping below $5,000 an ounce, while spot silver sank 13.9 per cent to $99.94 an ounce.