After crashing nearly 20% earlier in the session, gold and silver ETFs staged a rebound, recovering up to 10% by mid-trade. The sharp sell-off followed a steep correction in bullion prices from recent record highs, as investors booked profits and traders unwound leveraged positions, triggering broad-based selling.MCX Silver futures due March 5, 2026, which had slipped to Rs 2,55,652 per kg, recovered to around Rs 2,67,500. Meanwhile, gold futures for April 2, 2026 delivery rebounded from an intraday low of Rs 1,43,501 per 10 grams to about Rs 1,47,400.
In the previous session, MCX Silver futures had declined Rs 26,273, or 9%, to settle at Rs 2,65,652 per kg. Gold April futures fell 3%, or Rs 4,592, to close at Rs 1,47,753 per 10 grams.

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Gold and silver ETFs crash, then recover partially
Gold and silver ETFs witnessed sharp losses before staging a partial recovery. Zerodha Gold ETF, Nippon India Gold ETF and Aditya Birla Sun Life Gold ETF, which had fallen up to 9%, recovered during the session and were down around 5% at last count.

Axis Silver ETF, which had hit the 20% lower circuit, recovered about 10% and was trading at around Rs 231. Edelweiss Silver ETF also fell up to 20% earlier in the session but rebounded nearly 10% to Rs 232.17 during the same period.
Dollar strength, global cues weigh on bullion
The dollar held on to recent gains as investors assessed the potential policy stance of the US Federal Reserve under Kevin Warsh, who is seen as favouring a smaller balance sheet. A firmer dollar typically weighs on gold prices, as it makes the greenback-priced metal more expensive for buyers using other currencies.
In the international market, spot gold slipped 1.5% to $4,793.97 per ounce as of 0046 GMT, after touching a more than one-week low on Friday. The pullback came a day after bullion scaled a record high of $5,594.82. In contrast, spot silver rose 1.6% to $85.98 an ounce, though it remains well below its all-time high of $121.64 hit on Thursday.

Continued crash in bullion, ETFs
On February 1, silver fell nearly 9%, wiping out Rs 1.35 lakh of its value in just two days, while gold mirrored the weakness and slipped over Rs 31,000 over the same period. On January 30, silver delivered a stunning reversal on the MCX, plunging up to 27% — or Rs 1,07,968 — in a single day, marking its worst-ever crash and dragging prices back below the Rs 3 lakh mark, just a day after the metal had surged to a record high of Rs 4 lakh.

Gold prices also tanked as much as 12%, or Rs 20,514, in a single day on January 30, marking their worst one-day rout since March 2013, when prices had plunged 9% on the MCX.

BSE imposes circuit limits on ETFs
Following the historic crash in gold and silver prices, BSE on February 1 imposed a 20% circuit limit on gold and silver ETFs. For the current trading session, ETF prices are anchored to the previous day’s NAV (T-1 NAV), with transactions permitted only within a ±20% band. The move aims to curb excessive intraday volatility and protect investors from abrupt price swings.

“In view of the volatility in underlying gold and silver prices, the reference price for gold and silver ETFs traded on the Exchange shall be based on the T-1 NAV as published by the respective mutual funds/asset management companies. Accordingly, the prescribed price band of +/- 20% shall be applicable to the said T-1 NAV price for trading purposes,” BSE said in a circular released on February 1.

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What should investors do?
Jigar Trivedi, Senior Research Analyst at IndusInd Securities, said silver tumbled more than 6% to around $79 per ounce, remaining under pressure as markets continued to reel from Friday’s 26% plunge — the metal’s biggest one-day decline ever.

He added that geopolitical and economic uncertainties, along with concerns over the Fed’s independence, had reinforced silver’s safe-haven appeal. Momentum buying further amplified gains, with purchases from Chinese speculators adding froth to the rally and intensifying the sell-off as they booked profits. MCX Silver March prices could decline further to Rs 2,45,000 per kg, as the global sell-off in silver is yet to run its course, Trivedi said.

(Disclaimer: Recommendations, suggestions, views and opinions expressed by experts are their own and do not represent the views of The Economic Times)

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