Gold and silver ETFs rebound up to 30% in a single session—does this rally still have fuel or is caution wiser?
Gold and silver exchange traded funds (ETFs) staged a sharp comeback on January 23, rebounding strongly from the steep losses recorded a day earlier. The bounce comes as precious metals surged to fresh all-time highs, reigniting debate among investors on whether this is the right moment to buy or a phase where disciplined allocation matters more than chasing momentum.
Notably, while ETFs have recovered sharply, they are still below the 52-week highs they touched earlier this week before the rally paused for breath. That gap itself is shaping investor behaviour—encouraging fresh interest, but also raising questions around volatility and risk management.
A sharp rebound signals renewed appetite for safe-haven assets
The recovery was most visible in silver-linked products. Tata Silver ETF, which had plunged as much as 24% on Thursday to a low of ₹25.56, rebounded dramatically on Friday to hit an intraday high near ₹33. That represents a near 29–30% recovery from the lows in just one session, highlighting how aggressively sentiment has swung back in favour of precious metals.
Among gold ETFs, Groww Gold ETF emerged as the top gainer, climbing around 7% intraday to ₹155.97. Other gold ETFs also witnessed solid recovery, though most still remain some distance away from their recent peak levels.
Justin Khoo, Senior Market Analyst – APAC at VT Market, summed up the shift in positioning:
“The sharp surge in gold and silver ETFs is a clear reflection of how aggressively investors are repositioning toward safe-haven assets amid heightened global uncertainty.”
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Why volatility in precious metals is becoming the new normal
The last 48 hours in gold and silver ETFs underline a larger truth—precious metals are no longer slow-moving defensive assets. They are increasingly being traded like momentum instruments.
Prasenjit Paul, Equity Research Analyst at Paul Asset & Fund Manager at 129 Wealth Fund, offered a blunt assessment of the psychology driving ETF flows:
“What unsettles investors on days like yesterday is not the fall in gold or silver, but the illusion of stability that ETFs create. Precious metals are volatile assets, ETFs make them feel tradable like stocks, encouraging investors to react to daily price moves.”
His warning is particularly relevant for retail participants who entered ETFs during the recent euphoria without clarity on allocation, purpose, or exit strategy.
Should you buy gold and silver ETFs at these levels?
Market experts broadly agree on one thing: the long-term case for precious metals remains intact, but the approach needs to be disciplined.
Tanvi Kanchan, Associate Director at Anand Rathi Share and Stock Brokers, said the structural drivers continue to support gold and silver.
“Despite price swings, the fundamentals of precious metals are compelling, driven by near-record industrial demand from solar panels, electric vehicles and AI infrastructure.”
She added that geopolitical uncertainty—from ongoing conflicts to trade policy unpredictability under the new US administration—keeps precious metals relevant as portfolio hedges.
However, she also cautioned investors against aggressive lump-sum deployment after a sharp rally:
“After such explosive gains in 2025, timing a single-entry point is treacherous. Investors should consider spreading purchases over the coming weeks or months instead of deploying capital all at once.”
Her practical allocation guidance:
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Conservative investors: 5–10% of portfolio to gold/silver ETFs
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Prefer systematic purchases (SIP-style accumulation) over lump-sum buys
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Focus on role of metals as hedge, not speculative trade
Gold vs silver: where does the risk-reward look better now?
While both metals remain structurally positive, brokerages are beginning to differentiate between the two after silver’s outsized rally.
Motilal Oswal believes gold currently offers a more balanced risk-reward.
Navneet Damani, Head of Research Commodities, and Manav Modi, Commodities Analyst at Motilal Oswal Financial Services said:
“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 added that while silver still has strong long-term drivers—tight physical supply and rising industrial demand—the recent rally has increased near-term volatility. As a result, a higher allocation to gold could help investors stay invested in precious metals while managing portfolio swings.
Here’s what happened today and why traders reacted
Market participants point to three clear triggers behind Friday’s sharp rebound in ETFs:
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Fresh all-time highs in global gold and silver prices, reviving momentum interest
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Renewed geopolitical uncertainty, driving safe-haven positioning
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Dip-buying after panic selling, especially from short-term traders who exited on Thursday’s crash
Traders also highlighted that Thursday’s sharp fall had flushed out weak hands, creating room for stronger buyers to step in aggressively on Friday.
What this rally means for investor portfolios and market sentiment
The renewed surge in gold and silver ETFs is also influencing broader asset allocation trends:
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Equity investors are increasing hedge positions
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Portfolio volatility is being actively managed through metals exposure
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Fund managers are trimming equity risk at higher valuations
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Retail investors are shifting part of savings into defensive assets
With global markets facing uncertainty over trade policies, geopolitics and currency movements, precious metals continue to act as insurance rather than pure return assets.
Outlook: bullish long term, volatile short term
While experts remain optimistic about gold and silver over the medium to long term, they warn that price swings could remain violent.
ETF investors should prepare for:
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Sudden 10–15% corrections
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Rapid rebounds driven by news flow
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Policy-driven volatility
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Currency-linked fluctuations
For disciplined investors, however, the recent correction and rebound cycle reinforces the importance of structured allocation rather than emotional trading.
As Khoo summed it up, precious metals are “no longer just commodities — they are now strategic portfolio stabilisers in an unstable world.”
