Silver ETF prices sink in double digits as MCX futures plunge of 10% trigger sharp sell-off; details here

Precious metal ETFs witnessed a sharp erosion in value on Thursday as a sudden sell-off in futures markets ended a brief two-day rebound, with silver-linked ETFs suffering the steepest losses. The decline was triggered by an aggressive fall in MCX silver futures during early trade, which quickly spilled over into ETF prices, exposing investors to one of the most volatile sessions in recent months.

The initial weakness emerged on the Multi-Commodity Exchange, where silver futures cracked sharply, setting off a chain reaction across exchange-traded products. MCX Silver futures for March delivery plunged nearly 10% to around Rs 2,43,000 per kg, marking a dramatic reversal from recent highs. Gold futures also weakened, though to a far lesser extent, with April contracts slipping about 3% to roughly Rs 1,48,500 per 10 grams. As futures prices deteriorated, ETF valuations adjusted swiftly, reflecting real-time mark-to-market losses.

Silver, gold ETFs

This divergence played out starkly in ETF performance. Silver ETFs recorded heavy, broad-based losses, with most funds declining in double digits. Kotak Silver ETF plunged 14.61%, while Edelweiss Silver ETF dropped 13.48%. Mirae Asset Silver ETF slid over 13%, and HDFC Silver ETF fell close to 13%. ICICI Prudential, SBI, DSP, Nippon India, Axis, Tata, Zerodha, Aditya Birla Sun Life, UTI, Groww, Motilal Oswal, Bandhan, and 360 ONE Silver ETFs all posted losses ranging from about 10% to nearly 15%, highlighting aggressive one-day liquidation across the category.

Gold ETFs, while lower, showed relative resilience. Most gold-linked funds declined in the range of 3.5% to 4.5%, broadly tracking the movement in MCX gold futures. Invesco India Gold ETF, Edelweiss Gold ETF, Axis Gold ETF, and Motilal Oswal Gold ETF fell around 4–4.5%, while DSP, Mirae Asset, ICICI Prudential, SBI, HDFC, Quantum, and Bandhan Gold ETFs recorded slightly smaller declines.

Why the selloff

The sell-off was driven largely by easing safe-haven demand after confirmation of upcoming diplomatic talks between the United States and Iran in Oman on Friday. With officials from both sides acknowledging the discussions, markets began unwinding defensive positions built earlier on geopolitical uncertainty. Although negotiations remain complex — with Washington pushing to broaden the agenda to include Iran’s missile programme and Tehran maintaining a strict focus on nuclear issues — the immediate reaction was a sharp reduction in risk premiums embedded in precious metals.

Global cues intensified the pressure. Spot silver collapsed as much as 16.6% in international markets, after briefly recovering above the $90-an-ounce mark in early Asian trade. The magnitude of the decline underscored silver’s heightened sensitivity to shifts in sentiment and speculative positioning. Spot gold also declined, falling up to 3.5% in volatile trade, but its losses remained comparatively contained.

ETF prices

Market participants noted that ETF prices reacted rapidly as investors rushed to reduce exposure, particularly in silver, where higher volatility magnified losses. The episode once again underlined the risks associated with commodity ETFs during sharp futures-led corrections, especially in assets like silver that tend to experience exaggerated moves during shifts in global risk sentiment.

With geopolitical developments now dictating near-term direction, ETF investors are expected to remain cautious, closely tracking international cues and futures market trends for further signals.