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Gold, silver ETFs gain as investors buy the dip after sharp fall
Among the five largest silver exchange-traded funds (ETFs) by assets, Kotak Silver ETF led the rebound with a 9.4% gain. HDFC Silver ETF, Nippon India Silver ETF (Silverbees), ICICI Prudential Silver ETF, and SBI Silver ETF surged between 8.2% and 8.7%. International spot silver rose about 6.7% at about $83 an ounce during the day.
Gold funds also staged a recovery. Kotak Gold ETF climbed 2.85%, while Nippon India, SBI, HDFC, and ICICI Prudential Gold ETFs advanced 1.7-2.4%. Spot gold rose 2% to around $5,068 on Monday evening.
The bounce back follows a bruising week for precious metal funds. Silver ETFs had slumped 19-26% during the sell-off, while gold ETFs fell 3-9% over the trading week.
The market volatility is also influencing buying patterns as consumers who stepped in when gold cooled to about ₹1.5 lakh per 10 grams last week have turned more cautious, even as wedding-related demand is keeping the sales momentum.
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ETFs Surge up to 9% Much of the demand is coming from smaller cities where households are making early purchases of precious metals to hedge against a price surge in future
“Those who have marriages at home are buying in advance so that they can take advantage of the current rate,” said Joy Alukkas, chairman of Joy Alukkas group. “Gold is on a bullish trend and therefore prices are unlikely to fall drastically.”
Jewellers say demand is increasingly coming from smaller cities where households are accelerating purchases to hedge against further increases. “As gold and silver hit record highs and remain volatile, we are seeing a notable shift in consumer behaviour, especially in tier 2 and tier 3 cities,” said Vikas Kataria, promoter of Madhya Pradesh-based listed jewellery firm DP Jewellers. “Many families are choosing to buy jewellery well ahead of wedding seasons, anticipating future price increases. Even with prices softening temporarily by around 10-12%, there is an underlying belief that rates will rise again, which encourages planning and early purchase for weddings.” Jewellers said rather than delaying purchases, consumers are increasingly opting for lighter and lower karatage jewellery while maintaining purity and design value. “Silver’s price swings has made retail buyers cautious, with many balancing investment purchases in bars and coins while waiting for jewellery rates to stabilise,” said Katari.
Gold continues to face demand from long-term investors as it has given nearly 70% returns in just about a year, especially during market volatility and geopolitical uncertainties.
“Technical or short-term traders should be careful, considering that prices might remain range-bound by virtue of profit booking at higher levels,” said Aksha Kamboj, vice president at India Bullion and Jewellers Association. “The medium and longterm prospects for gold prices remain constructive. Investors should approach gold with a disciplined, staggered allocation strategy rather than chasing momentum.” Unlike gold, silver is an industrial metal as well as a precious metal.
Hence, the demand is linked, among other things, to sectors such as electronics, renewable energy, and electric vehicles.
“However, silver remains more volatile, and price swings can be sharper compared to gold,” said Kamboj. “Investors should remain mindful of this volatility while recognising silver’s long-term potential. A balanced approach, aligned with broader portfolio objectives, is advisable rather than aggressive positioning.”