Silver & gold ETFs gain over 119% in FY26. Time to add, rebalance or book profits for FY27?

The commodity based - gold and silver ETFs - gained over 119% in FY26, an analysis by ETMutualFunds showed. Silver ETFs have led the rally with average returns of 117.89%, while gold ETFs have also delivered strong gains of 54.80%. The sharp upmove has caught investor attention, but it also raises an important question—what should investors do next after such a stellar run - add, rebalance or book profits in FY27.

Market experts said that rebalancing should be done based on long-term asset allocation, the allocation should be between 5% to 15% but both needs to be dealt separately.

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Pallav Agarwal, Certified Financial Planner, Bhava Services LLP shared with ETMutualFunds that investors need to be very cautious in allocating their wealth towards these metals due to the sharp rally, the last leg of which seemed to be fuelled by speculation also and rebalancing should be done as per the long term asset allocation.

Though Gold and Silver prices move in the same direction, but both need to be dealt separately when it comes to investment decisions. In both the metals we have seen temporary tailwinds as well as structural demand, Agarwal said.

Another expert, Anand K Rathi - Co Founder of MIRA Money told ETMutualFunds that from an investment point of view, gold and silver should still be major parts of portfolios, but only up to a point, a good range for an allotment would be between 5% and 15% and if exposure has gone up more than this level after the surge, it might be smart to rebalance and take some winnings.

The recent surge in gold prices has largely been driven by structural factors, particularly the growing shift by central banks toward gold as a reserve asset. Over the past year, central banks have purchased nearly 900 tonnes of gold, signalling a gradual move away from the US dollar as the primary reserve currency, which has supported prices.

Silver’s rally, meanwhile, has been more demand-driven. Its increasing use in electronics and AI-related infrastructure has boosted consumption, while constrained supply has added to price volatility.

Good time to invest now?

After delivering triple-digit returns in silver and strong double-digit gains in gold, investors are wondering whether it is the correct time to enter these ETFs or not.

While believing that in near term commodities like gold and silver are likely to remain volatile rather than delivering linear returns and prices will stay in a certain range, with corrections and significant rises of 10–15% on either side, Rathi said that this climate is better for tactical allocation than for aggressive long-term positioning at these levels.

He further said that long-term investors may want to wait for volatility to settle down before increasing their strategic exposure and gold can still be a part of a core allocation over time, but the current levels call for caution.

Agarwal said that anytime is a good time to add if allocation in Gold is below 15% & Silver is below 5% of an investor’s net worth.

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Performance check

There were 14 silver ETFs in the said financial year, of which Tata Silver ETF delivered the highest return of around 119.30%, followed by Aditya Birla Sun Life Silver ETF which gained 118.75%.

On the other hand, there were 20 gold ETFs in the said period, of which ICICI Prudential Gold ETF gained the most of around 55.94% whereas 360 One Gold ETF delivered the lowest return of around 53.73% in FY26.

With volatility likely to remain a key feature in commodity markets, choosing the right investment approach becomes critical. Agarwal said that at the current levels when prices seem to be consolidating in a range, SIP would be a better strategy to increase allocation.

Rather than exiting on the corrections, any significant fall in prices should be used to boost the allocation through lumpsum investments to the asset allocation levels and partial exit can be done if allocation in these ETFs go above an investor’s asset allocation level for these metals, he further said.

While cautioning that given the sharp run-up in prices, gold has started behaving more like a high-beta asset in the short term, which makes lump sum investments relatively riskier at current levels, Rathi said that a phased approach through SIPs is better at this stage.

Rathi further said that investors should keep to a specific plan when it comes to getting out: they should sell when their investments go above their intended levels or when prices move way above fair value and instead of reacting to short-term price swings, the focus should continue on retaining the appropriate allocation for the portfolio.

How did silver and gold move in FY26?

Gold and silver emerged as the standout performers till January 29 offering investors superior returns.

January 2026 was a very eventful month for gold and silver. Prices of both metals went up sharply during most of the month as many investors rushed towards safe options because of uncertainty in global markets. People looked at gold and silver as protection for their money, which pushed prices higher.

Gold and silver reached very high levels, close to record prices. On January 29, Gold and silver futures scaled fresh lifetime highs on the Multi Commodity Exchange (MCX). Silver surged past the Rs 4 lakh mark for the first time, while gold climbed closer to Rs1.8 lakh per 10 grams.

Silver emerged better than gold in the starting month of the current calendar year because it benefits both as a precious metal and from industrial demand, which added to the buying pressure.

However, towards the end of the month, things changed quickly. Once prices became very high, many investors started selling to book profits. This caused a sudden fall in prices. On January 30, silver delivered a stunning reversal on the MCX, plunging up to 27% — or Rs 1,07,968 — in a single day, marking its worst-ever crash and dragging prices back below the Rs 3 lakh mark, just a day after the metal had surged to a record high of Rs 4 lakh.

Gold prices also tanked as much as 12%, or Rs 20,514, in a single day on January 30, marking their worst one-day rout since March 2013, when prices had plunged 9% on the MCX.

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The fall on January 31, silver delivered a stunning reversal on MCX, plunging up to 25% — or Rs 92,000 — in a single day, marking its worst crash in 15 years and dragging prices back below the Rs 3 lakh mark, just a day after the metal had soared to a record high of Rs 4 lakh.

What is the outlook for gold and silver ETFs?

Looking ahead to FY27, Rathi said in the short term, it looks like both gold and silver have gotten ahead of their underlying fundamentals and may stay under pressure or move sideways. We have already seen corrections of more than 20% from the highest levels, and more consolidation is yet possible.

When prices rise faster than fundamentals, they usually correct, and any slowdown in central bank buying could cap near-term gains. However, gold and silver remain strong medium-term plays for diversification and hedging despite expected volatility, Rathi said.

Agarwal said that both the metals are still in a structural bull run, investment in gold should be used as a hedge against uncertainty whereas silver investment should be done to benefit from widening industrial demand supply gap in the AI and semiconductors era.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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