Gold and silver ETFs fall up to 5%. Should investors buy the dip or stay cautious?

Silver and gold-based ETFs slipped up to 5% on Friday, even as prices opened higher on the MCX, supported by a softer dollar and easing geopolitical concerns after signals of progress in US-Iran talks and a temporary pause in strikes on energy infrastructure.

Nippon India Silver ETF slipped up to 4.03% to hit the day’s low of Rs 211.43. SBI Silver ETF and ICICI Prudential Silver ETF were also down nearly 4%. Kotak Silver ETF was down 4.19%. DSP Silver ETF and Groww Silver ETF were down 4.56% and 4.75%, respectively.

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ICICI Prudential Gold ETF declined 2.36%, whereas Nippon India ETF Gold BeES was down 2.09%. SBI Gold ETF fell 2.15% and Kotak Gold ETF 1.98% on Friday.

Love Shah, Partner & Principal Officer, ValueX Fund Managers LLP shared with ETMutualFunds that rising rates and selective central bank gold monetisation are keeping precious metals volatile and range-bound. Indian gold and silver ETFs are down today despite higher global prices, reflecting adjustment to yesterday’s decline during a market holiday.

Shah further said that with recession fears, silver may underperform; dips in gold toward ₹1,25,000 can aid strategic allocation.

The weaker dollar made dollar-denominated bullion more attractive for holders of other currencies. Adding to the momentum, a pullback in oil prices briefly eased inflation worries, raising hopes of potential interest rate cuts by the US Federal Reserve.

MCX silver futures due May 2026 were up Rs 5,140 or 2.3% to Rs 2,25,014 per kg. Meanwhile, gold futures for April 2026 delivery gained Rs 1,500 or 1% to Rs 1,40,900 per 10 grams.

Abhishek Bhilwaria, BhilwariaMF, AMFI-registered MFD, shared with ETMutualFunds that today, gold and silver are seeing a recovery phase, and this rebound is driven by a weaker US dollar and a temporary pause in West Asia geopolitical strikes, making dollar-denominated metals more attractive to international buyers.

However, many gold and silver ETFs have recently faced sharp declines, dropping up to 20% earlier in the month, because higher US Treasury yields and hawkish central bank signals increased the opportunity cost of holding non-yielding assets, leading to heavy institutional selling and profit booking, he added.

Bhilwaria, while recommending how investors should move ahead, said that for investors, a SIP remains the smartest move. Instead of risking a large lump sum, he suggested allocating 10 to 15% of the portfolio into ETFs or Sovereign Gold Bonds through regular instalments to buy the dips, while aiming for long-term targets of Rs 1.55 lakh for gold.

In the international market, the yellow metal rose over 1%. Spot gold gained 1.1% to $4,428.30 per ounce as of 0228 GMT, but is still down about 1.3% for the week so far. Spot silver also advanced 1.1% to $68.80 per ounce.

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Yesterday, gold corrected sharply to around $4,420 to $4,450 and silver plunged towards $67 to $72 amid ongoing macro headwinds and dollar pressure, Anup Bhaiya, Founder, Money Honey Wealth Services, told ETMutualFunds.

He added that for long-term investors, this fresh dip creates a compelling buying opportunity, as safe-haven demand, geopolitical risks and inflation-hedging fundamentals continue to support medium-term upside.

(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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