Gold and Silver ETFs Stage Partial Recovery After Sharp 20% Plunge
Exchange-traded funds (ETFs) tracking gold and silver managed to claw back some of their losses on Monday, following a dramatic sell-off that saw prices plunge nearly 20% earlier in the trading session. The sharp correction from recent record highs triggered massive price swings across bullion markets and related financial instruments.
Bombay Stock Exchange Imposes Trading Limits Amid Extreme Volatility
In response to the heightened market turbulence, the Bombay Stock Exchange (BSE) imposed circuit limits on gold and silver ETFs. For the current trading session, ETF prices are being linked to the previous day's net asset value (T-1 NAV), with trading permitted only within a range of plus or minus 20%. This regulatory intervention came after a severe sell-off from record peaks sparked unprecedented volatility in these investment vehicles.
Domestic Futures Show Wild Price Swings
On the Multi Commodity Exchange (MCX), silver futures expiring on March 5, 2026, experienced significant fluctuations, slipping to Rs 2,55,652 per kilogram before recovering to approximately Rs 2,67,500. Similarly, gold futures for April 2, 2026 delivery bounced back from an intraday low of Rs 1,43,501 per 10 grams to about Rs 1,47,400.
In the previous trading session, silver futures had fallen by Rs 26,273, representing a 9% decline, to settle at Rs 2,65,652 per kg. Gold April futures declined by 3%, or Rs 4,592, to close at Rs 1,47,753 per 10 grams.
International Markets Witness Corrections
Global bullion markets also experienced notable movements. Spot gold fell by 1.5% to $4,793.97 per ounce as of 0046 GMT, after hitting a more than one-week low on Friday. This drop occurred just one day after gold touched a record high of $5,594.82. Spot silver rose by 1.6% to $85.98 an ounce, though it remains substantially below its all-time high of $121.64 reached on Thursday.
ETF Performance and Recovery Patterns
Several prominent ETFs demonstrated remarkable recovery patterns after the initial crash. Zerodha Gold ETF, Nippon India Gold ETF, and Aditya Birla Sun Life Gold ETF, which had fallen as much as 9%, later recovered and were trading around 5% lower by mid-session. Axis Silver ETF hit the lower circuit before rebounding nearly 10% to around Rs 231. Edelweiss Silver ETF also dropped close to 20% before recovering nearly 10% to Rs 232.17.
Massive Value Erosion in Recent Sell-Off
The recent market correction has wiped out significant value across precious metals. On February 1, silver fell nearly 9%, erasing Rs 1.35 lakh in value over two days, while gold slipped more than Rs 31,000 during the same period. The volatility reached extreme levels on January 30, when silver experienced its worst-ever crash on the MCX, plunging up to 27% or Rs 1,07,968 in a single day. This dramatic fall brought silver below the Rs 3 lakh mark just one day after hitting a record high of Rs 4 lakh.
Gold also suffered a sharp decline during that session, dropping as much as 12% or Rs 20,514, marking its worst one-day decline since March 2013.
Analyst Perspectives on Market Dynamics
Jigar Trivedi, senior research analyst at IndusInd Securities, provided insights into the market movements. He noted that the white metal had fallen over 6% to about $79 an ounce and remained under pressure as markets continued to digest Friday's 26% crash, which registered as the sharpest single-day fall on record.
Trivedi highlighted that ongoing geopolitical and economic uncertainties, coupled with concerns about the US Federal Reserve's independence, had strengthened silver's safe-haven status. However, momentum-driven buying, including heavy participation by Chinese speculators, had initially fueled the rally and later deepened the sell-off as investors rushed to book profits.
On the domestic front, Trivedi predicted that MCX silver March contracts could slip further toward Rs 2,45,000 per kg, as the global silver sell-off has not yet fully played out.
Market Drivers and Global Factors
The sharp correction in precious metals followed steep corrections from recent record highs. Multiple factors contributed to the sell-off, including profit-booking by investors and position exits by traders, which led to heavy selling pressure. Global macroeconomic factors also played a significant role, with the US dollar holding firm as markets assessed the potential policy stance of the US Federal Reserve under Kevin Warsh.
Disclaimer: Recommendations and views on the stock market, other asset classes or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India.
