Silver, gold ETFs slide up to 20% amid renewed pressure on metal prices

Silver and gold exchange-traded funds (ETFs) in India saw a renewed sharp decline on Thursday as a two-day recovery in precious metals stalled, with silver falling over 16 per cent.

 

Silver ETFs fell between 15 per cent and 20 per cent on Thursday, while gold ETFs were down about 5 per cent, each.

 

Among silver ETFs, the HDFC Silver ETF, Nippon India Silver ETF and SBI Silver ETF declined about 15 per cent each. Kotak Silver ETF and ICICI Prudential Silver ETF tumbled 16 per cent each, while Axis Silver ETF fell 20 per cent.

 

In gold ETFs, Aditya Birla Sun Life Gold ETF declined 5.5 per cent, Axis Gold ETF fell 5 per cent, and Tata Gold ETF slipped 4.5 per cent. Nippon India Gold ETF dropped 6 per cent, while DSP Gold ETF declined nearly 5.5 per cent.

 

 

The ETFs tracked the weakness in underlying bullion prices. On the Multi Commodity Exchange, gold futures for March 5 delivery were trading about 1.58 per cent lower at ₹1,48,455 per 10 grams on Thursday, while March silver contracts slipped 9 per cent to ₹2,44,654 per kilogram.

 

Earlier this year, metals soared, driven by speculative trades, geopolitical upheaval and concerns about the US central bank's independence. The surge came to a sudden halt at the end of last week, with silver seeing its biggest ever daily drop on Friday and gold plunging the most since 2013, according to Bloomberg.

 

Between January 28 and February 2, silver and gold spot prices fell 32 per cent and 13 per cent, respectively. In the two days after that, silver and gold recovered 11 per cent and 6.5 per cent, with the prices once again seeing pressure in trade today. 

 

According to reports, the trigger for last Friday’s selloff was the news that US President Donald Trump would nominate Kevin Warsh to lead the Federal Reserve. 

 

Commenting on last week's crash in gold and silver prices, a "rare" event, Zerodha founder and Chief Executive Officer Nithin Kamath said such episodes are when risk management breaks down, with markets moving so violently that traders can lose more than their entire initial margin. He added that in his 16 years in the markets, he has seen a similar situation only once before, when crude oil prices turned negative during the Covid-19 pandemic.