Gold and Silver ETFs See Sharp Swings as Prices Rebound from Deep Lows
Gold and silver exchange-traded funds staged a partial comeback after a steep sell-off rattled investors, with precious metal prices rebounding strongly from intraday lows. The sudden volatility left traders scrambling to reassess positions, while long-term investors looked for signals on whether the correction was temporary or the start of a larger trend shift.
Several silver ETFs had earlier hit the lower circuit as panic selling gripped the market. Later in the session, some of these funds recovered meaningfully, though most still remained in negative territory. Gold ETFs also clawed back part of their losses after a steep morning decline.
Despite the rebound, the day served as a reminder that even traditional safe-haven assets can see sharp price swings when global triggers align.
Gold Futures Rebound Strongly on MCX After Early Crash
Gold futures on the Multi Commodity Exchange showed a dramatic intraday recovery. The March contract, which had fallen sharply earlier in the day, rebounded nearly eight percent from its lows and traded well above the levels seen during the crash.
The February contract also moved higher, posting a moderate recovery. Silver futures attempted a bounce as well, though they remained under pressure compared to gold.
Such sharp intraday reversals are uncommon in precious metals and usually signal a mix of short covering, bargain buying, and technical rebounds after oversold conditions.
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Silver ETFs Hit Lower Circuits Before Partial Recovery
Multiple silver-focused ETFs, including those from Edelweiss Mutual Fund, Kotak Mutual Fund, Mirae Asset Investment Managers and Tata Asset Management, hit the 20 percent lower circuit earlier in the day. This reflects the intensity of the sell-off in silver-linked instruments.
Later, some of these ETFs recovered up to around ten percent from their lows. Even so, most were still trading significantly below previous levels, indicating that investor confidence has not fully stabilised.
Gold ETFs mirrored a similar pattern — steep morning losses followed by partial recovery, with a few turning marginally positive.
Why Gold and Silver Prices Fell So Sharply
The correction in precious metals was driven by a combination of global and technical factors.
A stronger US dollar put pressure on gold and silver, as a rising dollar typically makes commodities more expensive for global buyers. Additionally, comments from US President Donald Trump about selecting Kevin Warsh, known for a hawkish stance on interest rates, to head the Federal Reserve weighed on sentiment. A hawkish Fed generally implies higher interest rates, which can reduce the appeal of non-yielding assets like gold.
Another trigger came from the CME Group, which raised margin requirements on metal futures. Higher margins mean traders must put up more capital to hold positions, often leading to forced unwinding and short-term price pressure.
Together, these factors created a perfect storm for profit-booking after a strong rally in precious metals.
What Analysts Say About the “Flash Crash”
Market experts largely view the fall as a correction rather than a structural breakdown.
Abhinav Tiwari of Bonanza Portfolio described the move as a cooling-off phase in an overbought market. He noted that long-term drivers remain intact, including central bank buying, silver’s supply deficit, and geopolitical tensions.
He emphasised that these factors provide a strong floor for prices despite near-term volatility.
Meanwhile, Siddharth Srivastava of Mirae Asset Investment Managers said a cautious approach is warranted. He suggested trimming excess exposure to precious metals and aligning allocations with long-term strategy. He also indicated a relative preference for gold over silver from a risk-reward perspective.
Here’s What Happened Today and Why Traders Reacted
Today’s moves were driven by fast money rather than fundamental investors.
Traders reacted to:
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Sudden margin hikes in global exchanges
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Dollar strength
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Hawkish US policy signals
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Heavy profit-booking after a rally
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Technical stop-loss triggers
Once prices fell rapidly, algorithmic and leveraged positions likely accelerated the decline, followed by short covering that fueled the rebound.
What This Means for Investors and Portfolios
For long-term investors, the core case for gold as a hedge against inflation, currency risk, and geopolitical stress remains largely unchanged. However, the episode highlights that even safe havens can be volatile in the short run.
Key portfolio takeaways:
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Avoid over-allocation to any one asset class
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Use corrections to rebalance, not panic
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Prefer staggered buying instead of lump-sum entries
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Maintain gold as a hedge, not a speculation
Silver, while offering higher upside in bull markets, tends to be more volatile and cyclical.
The broader message is clear: precious metals can protect wealth over time, but the journey can be bumpy. For disciplined investors, volatility often creates opportunity — but only when aligned with a clear asset-allocation strategy.
