Gold, silver crash drags ETFs down: Here’s how gold & silver ETF prices work
Gold and silver prices plunged sharply on Thursday, triggering a broad sell-off in ETFs tracking the precious metals. The decline highlights how closely ETF valuations are tied to bullion prices—driven by NAV, demand-supply dynamics, and market sentiment.
- Apr 2, 2026,
- Updated Apr 2, 2026 5:54 PM IST
Gold and silver prices witnessed a sharp correction on Thursday, dragging down exchange-traded funds (ETFs) tracking the precious metals, even as the asset class remains one of the strongest performers of FY26.
MCX silver futures for May 2026 delivery dropped Rs 13,613, or 5.5%, to Rs 2,29,888 per kg, while gold futures for June fell Rs 2,574, or 1.6%, to Rs 1,51,161 per 10 grams. The decline followed rising geopolitical tensions after the United States signalled continued military action in Iran, triggering volatility across commodity markets. The fall in bullion prices was mirrored in the ETF space, where both gold and silver funds saw notable declines. Silver ETFs led the losses, with some falling up to 4%, while gold ETFs slipped as much as 3% during the session.
The correction reflects the direct linkage between ETF prices and underlying commodity movements, with investor sentiment amplifying short-term fluctuations.
NAV vs market price: The core of ETF pricing
At the heart of ETF valuation lies the Net Asset Value (NAV), which reflects the total value of physical gold or silver held by the fund, adjusted for minimal expenses. This ensures that ETF valuations remain fundamentally linked to actual metal prices.
Hariprasad K, SEBI-registered Research Analyst and Founder, Livelong Wealth, explained that gold and silver ETFs in India derive their pricing through a structured mechanism that closely mirrors the underlying bullion market while incorporating real-time investor sentiment.
“At the core lies the Net Asset Value (NAV), calculated daily based on the total worth of physical gold or silver held by the fund, adjusted for minimal expenses. This ensures ETF valuations remain anchored to actual metal prices,” he said.
However, the traded price on exchanges can deviate slightly from NAV due to demand-supply dynamics. “In efficient markets like India, this deviation is typically limited to around 0.5–1%, as arbitrage participants realign prices,” he added.
MUST READ: Gold remains a $31 trillion market, still under-allocated in investor portfolios: Report
Domestic price benchmarking
Highlighting a key regulatory change, Hariprasad noted that 2026 marked a shift toward domestic spot price benchmarking, replacing global benchmarks.
“This enhances transparency and ensures ETF pricing better reflects local realities such as currency movements, import duties, and domestic demand conditions,” he said.
He added that bullion price movements remain the primary driver of ETF performance, with a 1% move in gold or silver typically translating into a similar change in ETF NAV. Intraday adjustments are reflected through indicative NAV (iNAV), which responds dynamically to global cues.
Focus on efficiency, not just price
From an analytical standpoint, Hariprasad emphasised that investors should look beyond price and evaluate pricing efficiency.
“Metrics like tracking error, expense ratio, and liquidity determine how effectively an ETF captures bullion returns. Even marginal inefficiencies can lead to meaningful performance gaps over time,” he said.
He added that in the current macro environment, gold ETFs continue to serve as a strategic hedge, while silver ETFs are better suited for tactical exposure due to higher volatility.
Correction and sentiments
Harshal Dasani, Business Head at INVasset Portfolio Management Service, said the recent correction in gold ETF-linked stocks appears sentiment-driven rather than fundamental.
“The weakness seems to be driven largely by profit-taking and a broader risk-off mood in equities, rather than any structural change in gold’s investment case,” he said.
He noted that gold prices remain supported by geopolitical tensions, central bank buying, and a softer global real yield environment.
MUST READ: How to protect your gold investments during a financial crisis
Investment approach
Dasani added that the correction could offer staggered buying opportunities for investors seeking portfolio diversification through gold.
“A measured strategy of accumulating on dips, rather than chasing aggressively, appears more sensible. Selectivity remains important as valuations in parts of the gold-linked space had moved ahead of fundamentals,” he said.
While gold and silver ETFs continue to closely track bullion prices, their valuation is influenced by multiple factors including market dynamics, regulatory shifts, and efficiency metrics. Understanding these elements is critical for investors navigating volatility in commodity-linked assets.
MUST WATCH: Iran War Impact: Gold, Crude & Silver Rally Explained | Market Commentary
Gold and silver prices witnessed a sharp correction on Thursday, dragging down exchange-traded funds (ETFs) tracking the precious metals, even as the asset class remains one of the strongest performers of FY26.
MCX silver futures for May 2026 delivery dropped Rs 13,613, or 5.5%, to Rs 2,29,888 per kg, while gold futures for June fell Rs 2,574, or 1.6%, to Rs 1,51,161 per 10 grams. The decline followed rising geopolitical tensions after the United States signalled continued military action in Iran, triggering volatility across commodity markets. The fall in bullion prices was mirrored in the ETF space, where both gold and silver funds saw notable declines. Silver ETFs led the losses, with some falling up to 4%, while gold ETFs slipped as much as 3% during the session.
The correction reflects the direct linkage between ETF prices and underlying commodity movements, with investor sentiment amplifying short-term fluctuations.
NAV vs market price: The core of ETF pricing
At the heart of ETF valuation lies the Net Asset Value (NAV), which reflects the total value of physical gold or silver held by the fund, adjusted for minimal expenses. This ensures that ETF valuations remain fundamentally linked to actual metal prices.
Hariprasad K, SEBI-registered Research Analyst and Founder, Livelong Wealth, explained that gold and silver ETFs in India derive their pricing through a structured mechanism that closely mirrors the underlying bullion market while incorporating real-time investor sentiment.
“At the core lies the Net Asset Value (NAV), calculated daily based on the total worth of physical gold or silver held by the fund, adjusted for minimal expenses. This ensures ETF valuations remain anchored to actual metal prices,” he said.
However, the traded price on exchanges can deviate slightly from NAV due to demand-supply dynamics. “In efficient markets like India, this deviation is typically limited to around 0.5–1%, as arbitrage participants realign prices,” he added.
MUST READ: Gold remains a $31 trillion market, still under-allocated in investor portfolios: Report
Domestic price benchmarking
Highlighting a key regulatory change, Hariprasad noted that 2026 marked a shift toward domestic spot price benchmarking, replacing global benchmarks.
“This enhances transparency and ensures ETF pricing better reflects local realities such as currency movements, import duties, and domestic demand conditions,” he said.
He added that bullion price movements remain the primary driver of ETF performance, with a 1% move in gold or silver typically translating into a similar change in ETF NAV. Intraday adjustments are reflected through indicative NAV (iNAV), which responds dynamically to global cues.
Focus on efficiency, not just price
From an analytical standpoint, Hariprasad emphasised that investors should look beyond price and evaluate pricing efficiency.
“Metrics like tracking error, expense ratio, and liquidity determine how effectively an ETF captures bullion returns. Even marginal inefficiencies can lead to meaningful performance gaps over time,” he said.
He added that in the current macro environment, gold ETFs continue to serve as a strategic hedge, while silver ETFs are better suited for tactical exposure due to higher volatility.
Correction and sentiments
Harshal Dasani, Business Head at INVasset Portfolio Management Service, said the recent correction in gold ETF-linked stocks appears sentiment-driven rather than fundamental.
“The weakness seems to be driven largely by profit-taking and a broader risk-off mood in equities, rather than any structural change in gold’s investment case,” he said.
He noted that gold prices remain supported by geopolitical tensions, central bank buying, and a softer global real yield environment.
MUST READ: How to protect your gold investments during a financial crisis
Investment approach
Dasani added that the correction could offer staggered buying opportunities for investors seeking portfolio diversification through gold.
“A measured strategy of accumulating on dips, rather than chasing aggressively, appears more sensible. Selectivity remains important as valuations in parts of the gold-linked space had moved ahead of fundamentals,” he said.
While gold and silver ETFs continue to closely track bullion prices, their valuation is influenced by multiple factors including market dynamics, regulatory shifts, and efficiency metrics. Understanding these elements is critical for investors navigating volatility in commodity-linked assets.
MUST WATCH: Iran War Impact: Gold, Crude & Silver Rally Explained | Market Commentary