Silver ETF investors finally have some relief after the sharp crash seen on Thursday. After triggering panic selling across Indian commodity ETFs, silver ETFs and gold ETFs in India staged a recovery on Friday, because of strong overnight rebound in global markets and rising spot prices.
The recovery comes as spot silver prices surged sharply, while easing geopolitical fears and renewed buying interest lifted investor sentiment.
What Triggered the Silver ETF Crash on January 22nd?
On January 22, gold and silver ETFs in India crashed sharply, wiping out a large chunk of recent gains.Silver ETFs plunged 20-25%, with heavy losses seen in Tata Silver ETF, ICICI Prudential Silver ETF, Kotak Silver ETF
Similarly Gold ETFs dropped 9-12%, including, Tata Gold ETF ,Birla Sun Life Gold ETF etc
The sharp fall came after a multi-week rally that pushed precious metals to record highs. The primary reason behind the crash was aggressive profit booking, as global tensions eased and risk appetite returned to equity markets.
Another key factor was that many silver and gold ETFs were trading at a premium to their iNAV (Indicative Net Asset Value). As supply normalized and sentiment shifted, these premiums quickly flipped into discounts, amplifying losses at the ETF level. While spot gold and silver futures declined only 1-8%, ETF prices corrected far more sharply due to panic selling and sentiment-driven exits.
Global Markets Bounce Back Overnight
Markets globally turned positive overnight, which helped restore confidence in precious metals.
In the US market, S&P 500 rose 0.55% while Nasdaq jumped 0.91%. The rally was mainly because of easing political tensions, better than expected economic data, and strong performance from large tech stocks like Meta & Tesla, which surged 5.7% & 4.2% respectively. Meanwhile, Brent crude oil slipped 1.7% to $64.15 per barrel, easing inflation concerns.
Silver Prices Surge Today, Supporting ETF Recovery
Silver prices rebounded sharply, providing direct support to silver ETFs. Spot silver ended the previous session at $98.57 per ounceOn Friday, silver jumped nearly 3% towards $99 per ounce, touching fresh record highs.
According to the TradingEconomics report, “a weakening dollar provided additional support to the rally in precious metals. Investors sought real assets as the dollar suffered from shifting US-Europe geopolitical dynamics over Greenland and growing concerns that Europe could weaponize its substantial US asset holdings. Meanwhile, the US Federal Reserve is widely expected to keep interest rates unchanged next week, supported by signs of a resilient economy, though markets continue to price in two potential rate cuts later this year”
“President Donald Trump is expected to select the next Fed chair after completing interviews with candidates, with a more dovish appointee likely strengthening expectations for further easing. The rally in silver has also been fueled by a historic short squeeze and strong retail buying, as well as China’s tightening export controls.” it further added.
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