Silver, gold ETFs rebound sharply after Thursday's crash; here's why

A day after seeing a sharp fall, prices of Gold and Silver exchange-traded funds (ETFs) bounced back, seeing sharp recovery even as geopolitical concerns continued to ease. 

 

Silver ETFs saw a sharp rally on Friday, with HDFC Silver ETF rising 11.4 per cent, Kotak Silver ETF gaining 10.9 per cent, Nippon India Silver ETF and ICICI Prudential Silver ETF both climbing 11 per cent, SBI Silver ETF advancing 11.5 per cent, and Axis Silver ETF jumping 11.9 per cent.

 

Gold ETFs also posted strong gains, with Aditya Birla Sun Life Gold ETF rising 6.6 per cent, Axis Gold ETF up 7.7 per cent and Tata Gold ETF jumping 10.9 per cent. Nippon India Gold ETF gained 6.5 per cent, while LIC MF Gold ETF rose 8 per cent and DSP Gold ETF added nearly 6 per cent.

 

   

The ETFs were taking cues from gain in gold and silver prices. Multi-Commodity Exchange (MCX) gold February 5 futures are up 1.28 per cent to ₹1,58,341 on Friday, while the March contracts for MCX silver hit a new high and gained 2.61 per cent to ₹3,35,830.

 

In January so far, MCX spot silver has rallied 28 per cent and gold has gained nearly 13.6 per cent, according to data compiled by Bloomberg. Meanwhile, Nifty and Sensex are down 3.3 per cent and 3.5 per cent, respectively.   The sharp surge in gold and silver ETFs is a clear reflection of how aggressively investors are repositioning toward safe-haven assets amid heightened global uncertainty, Justin Khoo, Senior Market Analyst - APAC, VT Market, said. The strength in gold and silver is being reinforced by a softer US dollar, persistent geopolitical tensions, and growing concerns around currency stability, all of which are driving strong ETF inflows as investors prefer liquid, regulated exposure, Khoo added. 

 

On Thursday, the silver and gold ETFs came under heavy selling pressure as geopolitical tensions eased after US President Donald Trump rolled back his threat to impose tariffs on several European countries over their stance on Greenland. According to Trump, discussions with Nato resulted in an understanding covering Greenland and the wider Arctic region, which he said would be mutually beneficial for the US and its allies. 

Silver and gold outlook

MCX Gold continues to track global strength, aided by a stable USD/INR band between 91.30 and 91.60, Ponmudi R, CEO of Enrich Money, said.  A sustained breakout above ₹1,59,000-₹1,60,500 is likely to accelerate the rally toward ₹1,63,000-₹1,65,000, he said. "Overall structure remains strongly bullish, with momentum firmly on the upside."

 

MCX Silver continues to exhibit high-beta leadership, absorbing every minor correction with ease, he said. "Immediate upside targets are placed at ₹3,50,000-₹3,60,000, with further extension possible toward ₹3,70,000-₹3,75,000 over the coming months. Any pullback toward ₹3,28,000-₹3,20,000 should be viewed as a high-conviction accumulation zone."

 

 

==========  (Disclaimer: The views and investment tips expressed by the analysts in this article are their own and not those of the website or its management. Business Standard advises users to check with certified experts before taking any investment decisions.)