Gold ETFs Crash Up To 16% As Gold Falls Rs 9,000 Per 10 gm And Silver Drops Rs 17,000 Per Kg In Early Trade On

Gold and silver prices saw a sharp fall on the Multi Commodity Exchange (MCX) on February 1, triggering heavy losses in gold and silver exchange-traded funds (ETFs). Both precious metals dropped nearly 6 per cent at the opening of trade, extending their decline for the third straight session.

Gold Silver Price

The sudden fall led to panic selling in ETFs, with several gold and silver funds losing up to 16 per cent during early trading hours on Sunday.

Gold and Silver Futures Record Steep Losses

Gold futures for April delivery fell by around 6 per cent, or ₹9,140 per 10 grams, opening at ₹1,43,205 per 10 grams. This marks a sharp correction of nearly ₹50,000 per 10 grams, or about 26 per cent, in just three sessions after gold recently touched a lifetime high.

Silver futures for March delivery also slipped nearly 6 per cent, falling by ₹17,515 per kilogram to open at ₹2,74,410 per kg. Over the last three sessions, silver prices have dropped by around ₹1.45 lakh per kg, or nearly 35 per cent, after hitting record highs earlier.

Gold and Silver ETFs Fall Up to 16%

The sharp fall in spot prices had a direct impact on ETFs linked to precious metals. Several gold ETFs declined between 14 and 16 per cent in early trade. Silver ETFs also came under pressure, with some funds falling as much as 16 per cent.

Market participants said the heavy losses were largely due to profit-booking after a strong rally, rather than any major change in long-term fundamentals.

What Triggered the Sudden Crash?

Analysts pointed to multiple reasons behind the sharp correction. One key factor was aggressive profit-taking after gold and silver rallied to record levels in recent weeks. A stronger US dollar and rising bond yields also added pressure on prices.

Another major trigger was a statement from Donald Trump, who announced the selection of former Federal Reserve Governor Kevin Warsh to head the US central bank. Warsh is known for his tough stance on inflation and reluctance towards quick interest rate cuts, which weighed on bullion prices.

What Should Investors Do Next?

Market experts believe the recent fall is a short-term correction and not a breakdown of the overall trend. Pranav Koomar, Founder and CEO of PlusCash, said the decline appears to be a classic case of profit-booking after a long rally.

He added that global uncertainty, central bank buying and supply constraints continue to support gold prices in the medium to long term. According to him, investors may consider using sharp declines as buying opportunities rather than panic-selling.

Maneesh Sharma, AVP at Anand Rathi Shares & Stock Brokers, said markets may remain volatile in the near term as investors track US labour market data and developments around the Union Budget. He added that any changes in import duty rules could also impact domestic gold and silver prices.

For now, experts expect prices to remain volatile with a corrective bias before stabilising at lower levels.

Credit: Oneindia