Gold & Silver ETFs Rebound: Panic Selling Unfounded

Gold and silver Exchange Traded Funds (ETFs) demonstrated a strong recovery after experiencing a significant sell-off in recent sessions. Leading fund managers have indicated that the widespread "panic selling" was a misinterpretation of the market, as the core fundamentals of these metals remained intact.

On February 3, 2026, MCX silver futures for March 5 saw a 13.63% increase, settling at Rs 2,68,234 per kg. Simultaneously, gold futures for April 2 rose 5.70%, closing at Rs 1,52,200 per 10 grams. This rebound followed a period of heavy selling where sentiment turned negative despite no fundamental shifts.

The steepness of the decline, particularly in silver-linked products like Tata Silver ETF and HDFC Silver ETF, created an exaggerated impression of a market breakdown. However, fund managers clarified that ETFs are backed by physical gold and silver, and significant redemptions were not observed, with many investors using the dip to average positions.

Silver's tendency to exhibit higher volatility than gold is attributed to its dual nature as an industrial product with fluctuating demand and supply, coupled with significant speculative trading in futures markets. Gold, conversely, is perceived as a safer asset, with central banks being major buyers since 2022, accounting for about one-third of global demand.

Experts like Satish Dondapati and Siddharth Srivastava advise investors to maintain a consistent allocation of 15-20% in precious metals and to invest gradually rather than deploying capital in lump sums, especially during volatile periods. They emphasize that gold currently presents a more attractive risk-reward profile after its meaningful correction.