Silver exchange-traded funds (ETFs) staged a sharp rebound on Friday, January 23, with several funds surging as much as 17% amid a rebound in silver prices after a brief but intense correction. The rally in silver ETFs came just a day after heavy selling triggered steep declines, highlighting the extreme volatility in silver-linked investment products.
While silver ETFs are still trading below their recent peaks, the underlying metal surged to fresh record highs, reinforcing silver’s leadership in the ongoing precious metals rally despite high volatility.
Silver prices hit fresh all-time highs
In the domestic futures market, MCX silver futures for March jumped to a new all-time high of ₹3,39,927 per kilogram. Silver contracts with May and July expiries were also trading at record levels, marking a sharp turnaround after a 4% decline in the previous session. MCX gold February futures jumped by nearly ₹2,900, or almost 2%, to a fresh record high of ₹1,59,226 per 10 grams.
Internationally, silver prices breached the $99 per ounce level and inched closer to the key $100 psychological mark.
Precious metals remained supported as geopolitical tensions continued, even after US President Donald Trump stepped back from threats to impose tariffs on European Union nations amid negotiations linked to Greenland.
Commodity prices also benefited from sustained weakness in the US dollar. The dollar remained under pressure on Friday and was headed for its worst weekly performance so far this year, after recording its largest single-session fall in a month in US trading. A weaker dollar typically boosts demand for precious metals by making them cheaper for buyers holding other currencies.
Silver ETFs rebound
Silver-focused ETFs outperformed during the session. Tata Silver ETF surged as much as 17% amid renewed buying interest from retail investors.
Other silver ETFs also posted strong gains. Nippon India Silver ETF, DSP Silver ETF and ICICI Prudential Silver ETF rallied by around 10%–11% each, reflecting renewed risk appetite after the previous day’s steep correction.
Market participants noted that silver’s approach toward the $100 level could act as a major trigger — either opening the door for a further rally toward $110–120, or prompting sharp profit booking.
Gold ETFs gain, but trail silver
Gold ETFs also moved higher, though gains were more moderate compared with silver-linked funds. Groww Gold ETF, Invesco India Gold ETF, Motilal Oswal Gold ETF and Axis Gold ETF climbed by around 4% each.
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 advanced by more than 3% each, tracking the rise in gold prices.
Extreme volatility seen in silver ETFs
Despite the sharp rebound, volatility in silver ETFs remains unusually high. On the previous trading day, silver ETF prices plunged as much as 20% amid panic selling, far steeper than the 2%–3% decline seen in MCX silver prices.
This divergence highlights a key risk in silver ETFs: prices can be driven more by unit demand and supply rather than the actual movement in the underlying metal. Silver ETFs are particularly prone to such swings, with net asset values (NAVs) often trading at steep premiums or discounts to their indicative NAVs (iNAVs) during periods of extreme demand.
Should investors buy silver ETFs now?
Tapan Patel, Fund Manager – Commodities, Tata Asset Management, said silver’s sharp rally needs to be viewed with caution despite its strong long-term case.
“Silver’s dual role as both a precious metal and an industrial commodity gives it strong return potential, but its history of sharp swings means retail investors should not chase rallies blindly. At current levels, silver is better suited for tactical exposure or as a smaller, specialised allocation within a diversified portfolio rather than a core hedge,” he opined.
He added that recent episodes where ETF prices traded at steep premiums to iNAV highlight how supply constraints and demand surges can temporarily disconnect prices from underlying value, making staggered and systematic investing more prudent.
Ravi Singh, Chief Research Officer, Master Capital Services, said 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 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 said investors should avoid over-concentration and use precious metals as a hedge and stabiliser, with the emphasis firmly on capital preservation rather than aggressive gains.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
