Gold and Silver ETFs Rally as Domestic Prices Rebound Despite Firm Dollar
Gold and silver exchange traded funds (ETFs) witnessed strong gains on February 19, rising up to 4 percent as domestic bullion prices rebounded sharply. The rally came even as global commodity sentiment remained muted due to a firm US dollar and ahead of key US inflation data that could influence the Federal Reserve’s interest rate trajectory.
Gold futures (April expiry) on the MCX climbed to ₹1,56,133 per kilogram during morning trade, while silver futures (March expiry) rose nearly 1 percent to ₹2,45,870 per kilogram.
The move surprised traders given that the US dollar hovered near a more-than-one-week high, typically a negative factor for gold and silver prices since bullion becomes more expensive for holders of other currencies.
Margin Withdrawal by MCX and NSE Triggers Buying Momentum
The key trigger behind the rise in domestic gold and silver prices was the removal of additional margins by the Multi Commodity Exchange of India and the National Stock Exchange of India.
Earlier this month, MCX had imposed:
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3% additional margin on gold futures
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7% additional margin on silver futures
These measures were introduced as risk-management steps after a record rally in precious metals earlier this year. However, following a recent sharp correction, the exchanges withdrew these additional margins, effective immediately.
The removal improved liquidity conditions and reduced trading costs, encouraging fresh participation in bullion contracts.
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Silver ETFs Lead Gains; Gold ETFs Follow
Among silver ETFs, Groww Silver ETF surged more than 4 percent. Other silver ETFs such as UTI Silver ETF, Axis Silver ETF, HDFC Silver ETF, and Motilal Oswal Silver ETF gained close to 4 percent in early trade.
In the gold ETF space, Motilal Oswal Gold ETF and Groww Gold ETF rose over 2 percent, while SBI Gold ETF and ICICI Prudential Gold ETF added nearly 2 percent.
The rally indicates renewed investor interest in safe-haven assets amid volatility in equities and global macro uncertainty.
Here’s What Happened Today and Why Traders Reacted
Today’s surge in gold and silver ETFs was primarily driven by:
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Withdrawal of additional margins by MCX and NSE
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Lower trading costs improving liquidity
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Tactical buying after recent correction
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Persistent geopolitical uncertainty
While global bullion sentiment remained cautious due to a firm dollar, domestic triggers outweighed international headwinds, prompting traders to re-enter positions.
Experts Warn of Volatility Amid US Data and China Holidays
Despite the rebound, analysts caution that the broader technical structure for gold still shows weakness.
Jateen Trivedi, VP Research Analyst – Commodity and Currency at LKP Securities, said:
“A decisive break above $5,000 on CME would be required to negate the short-term weakness and revive bullish momentum. Fed’s meeting minutes and China’s market reopening are likely to inject additional volatility. Immediate support is near ₹1,48,000, while resistance remains around ₹1,55,000.”
Meanwhile, Aamir Makda, Commodity & Currency Analyst at Choice Broking, highlighted the impact of the week-long closure of the Shanghai Gold Exchange due to Lunar New Year.
He explained:
“As the world’s largest physical buyers go offline, trading volumes thin out, often resulting in exaggerated price volatility and wider bid-ask spreads. Historically, this period triggers a price correction.”
Makda also warned that silver is particularly vulnerable during this phase because Chinese industrial production slows sharply during festivities.
What Impact Could This Have on Investor Portfolios?
For investors, the surge in gold and silver ETFs offers both opportunity and caution.
Positive factors:
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Safe-haven demand amid geopolitical risks
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Reduced trading costs after margin withdrawal
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Portfolio hedge against equity volatility
Risks to consider:
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Strong dollar pressure
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Fed rate-cut uncertainty
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Liquidity vacuum due to China holidays
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Technical resistance levels near ₹1,55,000
Silver, being more volatile and industrial-demand driven, may experience sharper swings compared to gold.
What Could Happen in the Coming Days?
Markets are closely watching:
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US inflation data
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Federal Reserve policy signals
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Developments in US–Iran tensions
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Reopening of Chinese bullion markets
If gold breaks above $5,000 decisively, it could revive bullish momentum. However, failure to sustain above resistance may lead to consolidation or renewed correction.
Market Impact and Investor Strategy
While equity markets remain volatile, precious metals continue to attract defensive allocations. Analysts recommend:
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Avoid aggressive leverage in bullion
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Adopt phased accumulation strategy
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Monitor support at ₹1,48,000
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Watch resistance near ₹1,55,000
The removal of extra margins has improved trading conditions, but volatility risks remain elevated.
For now, gold and silver ETFs have regained attention — but the sustainability of this rally will depend on global macro cues and technical breakouts.
