After a bruising sell-off over the past few sessions, gold and silver made a strong comeback on February 3, lifting prices and pushing related exchange-traded funds (ETFs) sharply higher. Several silver ETFs surged as much as 10% in early trade, while gold ETFs climbed 4–5%, signalling renewed investor confidence after what analysts called a “violent” but largely technical correction.
The rebound comes as precious metals recovered from recent lows, following margin-related selling pressure and a sharp rise in volatility last week.
Gold and silver prices bounce back
Gold futures on the Multi Commodity Exchange (MCX) with March expiry jumped nearly 4%, moving close to the Rs 1.5 lakh per 10 grams level. This recovery follows a steep fall from last week’s record high of around Rs 1.93 lakh per 10 grams, which had triggered heavy profit-booking.
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June-expiry gold futures also gained about 4% to trade near Rs 1.52 lakh per 10 grams.
Silver saw an even stronger move. March-expiry silver futures rallied nearly 9% to around Rs 2.57 lakh per 10 grams, rebounding sharply after slipping from recent peaks of over Rs 4.2 lakh per 10 grams.
Silver ETFs lead the recovery
The sharp recovery in spot and futures prices spilled over into ETFs tracking precious metals. Silver ETFs were the biggest gainers, with several funds rising close to 10% during early trading hours.
Gold ETFs also posted healthy gains. Most gold-focused funds rose between 4% and 5%, tracking the recovery in MCX futures and international prices.
Market participants said ETF flows had turned positive again as panic selling eased and bargain hunting emerged at lower levels.
What caused the recent crash?
According to analysts, the sharp fall in gold and silver over the past two days was driven more by technical and policy-related triggers than by any major shift in fundamentals.
The sell-off began after CME Group raised margin requirements on gold and silver contracts, forcing leveraged traders to cut positions. This accelerated liquidation at a time when both metals were already heavily overbought.
At the same time, reports that US President Donald Trump may nominate Kevin Warsh—seen as a hawkish and dollar-supportive figure—as the next Federal Reserve Chair added pressure. Expectations of tighter monetary policy boosted the US dollar, which typically weighs on precious metals.
“The correction was amplified by extreme overbought conditions after gold and silver touched unprecedented highs just days earlier,” said Hareesh V, Head of Commodity Research at Geojit Investments. He noted that silver had surged more than 60% in a month, while gold was up over 20%, making the market vulnerable to sharp profit-taking.
Are fundamentals still intact?
Despite the steep correction, most analysts believe the broader outlook for gold and silver remains constructive.
“The violent drop looks more like a technical correction than a deterioration in core fundamentals,” Hareesh V said, adding that long-term drivers such as geopolitical tensions, central bank buying and macroeconomic uncertainty are still in place.
Kyle Rodda, Senior Market Analyst at Capital.com, told Reuters that prices now appear closer to fair value after weeks of what he described as “fairly irrational” market behaviour.
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Adding to the positive sentiment, traders are increasingly pricing in at least two US Federal Reserve rate cuts later this year. Lower interest rates tend to support non-yielding assets like gold and silver.
What lies ahead for investors?
In the near term, experts expect volatility to remain high, especially if global cues around interest rates, the US dollar and geopolitical developments shift quickly. However, dips are likely to attract buying interest, particularly from long-term investors who see precious metals as a hedge against uncertainty.
For ETF investors, the recent move is a reminder that sharp corrections can happen even in strong bull runs. Analysts advise staying disciplined, avoiding leveraged bets, and focusing on long-term allocation rather than short-term price swings.
FAQs
Gold and silver ETFs rebounded after prices recovered from a sharp sell-off triggered by higher margin requirements, profit-booking, and a stronger US dollar. Analysts say the fall was largely a technical correction, not a sign of weakening fundamentals.
Experts believe long-term drivers such as central bank buying, geopolitical uncertainty, and expectations of US rate cuts remain supportive. However, short-term volatility is likely to continue.
