Gold ETFs Steal the Spotlight in Record Rally: Are Investors Quietly Rotating from Silver to Gold?
The rally in precious metals has entered an explosive phase, but the real story on Dalal Street is not just about rising prices — it is about where the smart money is now moving. On January 29, gold ETFs surged as much as 13 percent, decisively outperforming silver ETFs, even as both metals touched fresh all-time highs.
This sharp divergence is forcing traders and long-term investors to reassess their positioning. After a year in which silver delivered a staggering 200 percent rally compared to gold’s 80 percent rise, market participants are now asking a critical question: Is the leadership shifting back to gold?
Gold Prices Hit Lifetime Highs, Triggering Aggressive Buying in ETFs
The momentum in gold turned parabolic after MCX gold futures with February expiry surged nearly 9 percent to hit a record Rs 1,80,779 per 10 grams. April and June contracts also jumped around 9 percent each, confirming strong bullish sentiment across maturities.
This price action translated directly into powerful gains across gold ETFs. Kotak Gold ETF surged over 13 percent to a lifetime high of Rs 155, while Baroda BNP Paribas Gold ETF climbed about 10 percent. Axis Gold ETF, 360 ONE Gold ETF, Union Gold ETF and LIC MF Gold ETF gained close to 9 percent each.
For investors, this surge reflects more than speculative interest. It signals rising demand for gold as a strategic hedge against global uncertainty, currency risk and financial volatility, themes that are once again dominating global markets.
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Here’s What Happened Today and Why Traders Reacted
The session saw strong intraday activity in commodity-linked instruments, with gold ETFs attracting aggressive volumes. Traders responded to three immediate triggers:
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MCX gold breaking decisively above psychological resistance levels
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Rising geopolitical tensions between the US and Iran reigniting safe-haven demand
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Expectations that global liquidity conditions could remain supportive after the US Fed held rates steady
Short-term traders actively chased momentum in gold ETFs and gold futures, while positional participants used the breakout as confirmation of trend strength. In contrast, silver ETFs saw buying but with slightly more caution, reflecting emerging concerns around volatility after an extended rally.
Silver Hits New Highs Too, But Relative Momentum Begins to Cool
Silver futures with March expiry rose nearly 6 percent to touch a record Rs 4,07,456 per kg, while May and July contracts also climbed around 6 percent each. ETFs tracked the move, with Motilal Oswal Silver ETF gaining about 8 percent to Rs 371.91, and Nippon India Silver ETF posting similar gains.
Yet, despite these strong numbers, silver ETFs are no longer leading the rally as they did earlier. The metal has already delivered an extraordinary 200 percent return over the past 12 months, making it one of the best-performing global assets.
This extended run has introduced greater volatility, and market participants are now becoming more selective rather than blindly chasing upside.
Global Uncertainty and Geopolitics Drive Fresh Safe-Haven Demand
The rally is being powered by a mix of macroeconomic and geopolitical factors. According to Reuters, Marex analyst Edward Meir noted that “growing US debt and uncertainty created by signs that the global trade system is splintering into regional blocs are leading investors to pile into gold.”
Geopolitical risk has also escalated. After US President Donald Trump urged Iran to return to nuclear negotiations and warned of severe consequences for future escalation, Tehran responded with threats against the US and Israel. Such developments typically fuel safe-haven demand, benefiting gold disproportionately.
Gold has also received support from reports that a major crypto group plans to allocate 10–15 percent of its investment portfolio to physical gold, reinforcing gold’s role as a strategic reserve asset.
Gold vs Silver: Why Brokerages Now Prefer Gold in the Near Term
Motilal Oswal Financial Services recently highlighted that silver’s sharp outperformance has led to a dramatic compression in the gold–silver ratio from 127 during the pandemic to around 50 in early 2026. This shift suggests that silver may have moved ahead of fundamentals in the near term.
“This reset suggests that while the long-term outlook for precious metals remains constructive, the near-term risk-reward equation may now be shifting in favour of gold after silver’s outsized run,” the brokerage said.
Navneet Damani and Manav Modi of Motilal Oswal added, “Silver has delivered sharp outperformance in a short span, and with the gold–silver ratio now near lower levels, the near-term risk-reward is turning more favourable for gold.”
They further noted that while silver remains a strong long-term story due to industrial demand and tight physical supply, gold offers better stability during volatile phases.
ETF Flows Signal Investor Preference Is Tilting Toward Gold
Another important signal comes from global ETF flows. Despite rising prices, global silver ETFs have seen outflows of over 3 million ounces since the start of 2026, while gold ETFs have recorded relatively steadier inflows. This indicates that investors are increasingly choosing gold as a defensive allocation.
Motilal Oswal now advises a 75 percent allocation to gold and 25 percent to silver, signalling a clear preference for gold in the current environment while still retaining exposure to silver’s long-term potential.
What This Rally Means for Traders and Investor Portfolios
For short-term traders, the environment remains high opportunity but equally high risk. Volatility in silver is rising, making risk management essential. Gold, on the other hand, offers cleaner trends and more stable price behaviour.
For long-term investors, experts advise a balanced approach:
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Maintain exposure to gold as a hedge and portfolio stabiliser
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Retain selective allocation to silver for long-term structural upside
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Avoid lump-sum chasing after sharp rallies; prefer staggered investments
As Aditya Agrawal, CIO at Avisa Wealth Creators, puts it, “Long-term investors may consider staggered allocation within asset allocation limits, while short-term traders should remain cautious amid continued volatility.”
