Silver ETFs Stage Spectacular Rebound with 17% Surge
Silver exchange-traded funds (ETFs) experienced a remarkable recovery on Friday, January 23, with multiple funds skyrocketing up to 17% following a significant bounce in silver prices after a brief but severe correction. This impressive rally in silver ETFs occurred merely one day after intense selling pressure caused substantial declines, underscoring the extraordinary volatility characteristic of silver-linked investment vehicles.
Although silver ETFs continue to trade below their recent peaks, the underlying precious metal itself soared to unprecedented record levels, reaffirming silver's dominant position in the ongoing precious metals rally despite persistent high volatility.
Silver Prices Shatter All-Time Records
In the domestic futures market, MCX silver futures for March delivery surged to a historic all-time high of ₹3,39,927 per kilogram. Silver contracts with May and July expiries were similarly trading at record levels, representing a dramatic reversal following a 4% drop in the previous trading session. Concurrently, MCX gold February futures climbed by approximately ₹2,900, or nearly 2%, reaching a fresh record high of ₹1,59,226 per 10 grams.
On the international front, silver prices surpassed the $99 per ounce threshold and edged closer to the crucial psychological barrier of $100. Precious metals maintained their upward momentum as geopolitical tensions persisted, even after US President Donald Trump retreated from threats to impose tariffs on European Union nations during negotiations concerning Greenland.
Dollar Weakness Fuels Commodity Rally
Commodity prices received additional support from sustained weakness in the US dollar. The greenback remained under pressure throughout Friday and was poised for its worst weekly performance of the year so far, having recorded its most substantial single-session decline in a month during US trading. A weaker dollar typically enhances demand for precious metals by making them more affordable for buyers holding other currencies.
Silver ETFs Outperform with Double-Digit Gains
Silver-focused ETFs demonstrated exceptional performance during the trading session. Tata Silver ETF skyrocketed as much as 17% amid renewed buying interest from retail investors.
Other prominent silver ETFs also registered robust gains. Nippon India Silver ETF, DSP Silver ETF, and ICICI Prudential Silver ETF each rallied between 10% and 11%, reflecting renewed risk appetite following the previous day's steep correction.
Market analysts observed that silver's approach toward the $100 level could serve as a significant catalyst—potentially paving the way for further advancement toward $110–120, or alternatively triggering substantial profit booking.
Gold ETFs Advance but Lag Behind Silver
Gold ETFs also moved higher, although their gains proved more moderate compared to their silver-linked counterparts. Groww Gold ETF, Invesco India Gold ETF, Motilal Oswal Gold ETF, and Axis Gold ETF each climbed approximately 4%.
Meanwhile, 360 ONE Gold ETF, Bandhan Gold ETF, Tata Gold ETF, Angel One Gold ETF, Zerodha Gold ETF, Quantum Gold ETF, ICICI Prudential Gold ETF, Edelweiss Gold ETF, and Union Gold ETF each advanced more than 3%, tracking the upward movement in gold prices.
Extreme Volatility Persists in Silver ETFs
Despite the sharp rebound, volatility in silver ETFs remains exceptionally elevated. On the preceding trading day, silver ETF prices plummeted as much as 20% during panic selling, far exceeding the 2%–3% decline witnessed in MCX silver prices.
This divergence underscores a critical risk associated with silver ETFs: their prices can be driven more by unit demand and supply dynamics rather than actual movements in the underlying metal. Silver ETFs are particularly susceptible to such fluctuations, with net asset values (NAVs) frequently trading at substantial premiums or discounts to their indicative NAVs (iNAVs) during periods of extreme demand.
Expert Perspectives on Silver ETF Investment
Tapan Patel, Fund Manager – Commodities, Tata Asset Management, emphasized that silver's dramatic rally warrants cautious consideration despite its compelling long-term prospects.
"Silver's dual role as both a precious metal and an industrial commodity provides strong return potential, but its history of sharp price swings means retail investors should avoid chasing rallies blindly. At current levels, silver is better suited for tactical exposure or as a smaller, specialized allocation within a diversified portfolio rather than serving as a core hedge," he stated.
He further noted that recent instances where ETF prices traded at steep premiums to iNAV illustrate how supply constraints and demand surges can temporarily disconnect prices from underlying value, making staggered and systematic investing approaches more prudent.
Ravi Singh, Chief Research Officer, Master Capital Services, asserted that precious metals should primarily be viewed through the lens of risk management rather than short-term returns.
"Gold and silver are not return-generating assets in the traditional sense, but rather tools for portfolio diversification and protection during inflationary phases, currency weakness, and geopolitical uncertainty. Given their high volatility, exposure should be limited and actively rebalanced, especially at elevated price levels."
He advised investors to avoid over-concentration and utilize precious metals as hedges and stabilizers, with emphasis firmly placed on capital preservation rather than aggressive gains.
Disclaimer: The views and recommendations presented above belong to individual analysts or broking companies, and not of Mint. Investors are advised to consult certified experts before making any investment decisions.
