Gold, silver ETFs slide sharply after record rally; What should Investors do?

Mumbai | January 22

Gold and silver ETFs saw a sharp sell-off on Thursday, snapping their recent record run as easing geopolitical tensions triggered profit-booking across safe-haven assets.

Several silver ETFs dropped as much as 20–21% intraday, while gold ETFs declined up to 10–12% before paring some losses. The correction mirrors a pullback in underlying gold and silver prices, which had surged to lifetime highs earlier this week amid heightened global uncertainty.

Why did gold and silver ETFs fall today?

Gold and silver ETFs came under sharp pressure after geopolitical risks eased, triggering profit-taking across precious metals. Sentiment shifted after the US signalled a softer stance on trade and military action related to Greenland, saying an understanding had been reached with NATO and that tariffs scheduled for February 1 would not be imposed. The clarification led to an unwinding of safe-haven positions that had built up during the recent rally, pulling bullion prices lower and dragging ETF prices down sharply.

ETFs correct faster than metals

The fall in ETFs was steeper than the decline seen in futures markets, reflecting their sensitivity to investor flows. After a sharp run-up, ETF units tend to see quicker selling pressure as retail and short-term participants book gains, even when underlying metal prices are still at elevated levels.

Silver ETFs see sharper cuts

Silver ETFs faced the most significant pressure, reflecting the metal’s higher natural volatility.

Among silver funds, Tata Silver ETF plunged as much as 21%, reversing gains from its previous record high. Groww Silver ETF, 360 ONE Silver ETF, and Axis Silver ETF dropped around 16% each.

Other funds such as Kotak Silver ETF, Mirae Asset Silver ETF, and Aditya Birla Sun Life Silver ETF declined close to 15%, while Nippon India Silver ETF, DSP Silver ETF, HDFC Silver ETF, ICICI Prudential Silver ETF, and Bandhan Silver ETF fell by around 14% each.

The sharp move reflected both profit-booking and the unwinding of speculative premiums that had built up during the rally.

Gold ETFs also slide

Gold ETFs were relatively less volatile than silver but still posted meaningful losses after hitting record highs.

Aditya Birla Sun Life Gold ETF slipped about 12% to ₹130.42, while Axis Gold ETF, Tata Gold ETF, and Bandhan Gold ETF declined nearly 11% each. Meanwhile, DSP Gold ETF, HDFC Gold ETF, Nippon India Gold ETF, and LIC MF Gold ETF fell over 9%, after touching fresh lifetime highs in the previous session.

Should investors buy the dip?

Market views remain divided. Some see the correction as a natural pause after an overheated rally, while others caution that volatility may persist in the near term.

The broader case for precious metals remains intact. Gold and silver continue to benefit from their role as portfolio hedges amid global uncertainty, central-bank buying, and inflation concerns. Silver, in particular, is supported by long-term industrial demand from sectors such as clean energy, electronics and electric vehicles.

At the same time, prices are still near historically high levels, making sharp swings more likely. Entering aggressively at a single price point carries higher risk after such outsized gains.

A more measured approach, spreading purchases over time rather than chasing prices,  is widely seen as a way to manage near-term volatility while maintaining exposure. Partial profit-taking at elevated levels is also viewed as a way to rebalance portfolios without exiting the asset class entirely.

Volatility likely to stay

Despite the correction, the current move is being seen as sentiment-driven rather than a breakdown in fundamentals. However, given the pace of the earlier rally, price swings are expected to remain sharp in the near term as markets digest shifting geopolitical signals and macro cues.

Overall, precious metals continue to hold strategic relevance, but the latest pullback highlights the need for discipline and patience as markets transition from a momentum-driven phase to consolidation.

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