MUMBAI / NEW DELHI β The relentless rally in precious metals hit a major speed bump on Thursday as gold and silver Exchange Traded Funds (ETFs) witnessed a significant sell-off. The decline comes on the heels of a sudden de-escalation in geopolitical tensions involving the United States, Europe, and the Arctic region, which has prompted investors to rotate capital back into riskier assets.
On the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE), several silver ETFs recorded double-digit intraday losses, with some funds plunging as much as 15% to 20% in early trade. Gold ETFs mirrored this sentiment, though with more moderate declines of approximately 8% to 9%.
The primary catalyst for the correction was a series of diplomatic breakthroughs at the Davos 2026 summit. US President Donald Trumpβs announcement that he would not use military force to acquire Greenland and the subsequent cancellation of planned tariffs on European allies effectively dissolved the “geopolitical risk premium” that had pushed gold and silver to record highs earlier this week.
“The market was pricing in a full-scale trade war and significant Arctic instability,” said Aamir Makda, a commodity analyst at Choice Broking. “As soon as the President pivoted to a NATO-backed diplomatic framework, the immediate need for safe-haven protection evaporated, leading to classic profit-booking.”
Interestingly, the sell-off in the ETF market appeared far more aggressive than the movements in the underlying futures. While MCX Gold futures for February delivery dipped by around 1.7% and Silver futures fell by 2.2%, the ETFs saw much steeper drops.
Market experts explain that during the recent rally, many ETFs were trading at a substantial premium to their indicative Net Asset Values (iNAVs). As sentiment shifted, these premiums vanished almost instantly, causing the ETF prices to crash as they realigned with the actual value of the physical metal.
Despite the sharp intraday volatility, many analysts remain structurally bullish on the long-term prospects for precious metals. The structural demand for silver in renewable energyβparticularly for the mass production of high-efficiency solar panels and AI-integrated electronicsβcontinues to provide a fundamental floor for prices.
However, the immediate advice from financial planners is one of caution. “After such a vertical run, a correction was overdue,” noted Dr. Ravi Singh, Chief Research Officer at Master Capital Services. “We are advising investors to avoid catching the falling knife with large lump-sum entries. Instead, use these dips for staggered accumulation through Systematic Investment Plans (SIPs) in gold and silver funds.”
Key Market Levels to Watch for the traders. Traders are now closely monitoring international spot gold at the $4,750 per ounce support level and silver near $91.00. Domestically, MCX Gold is expected to find support around βΉ1.48 lakh per 10 grams, while silver finds its base near the βΉ3.10 lakh per kg mark.
With the US dollar strengthening on the back of improved risk appetite, the near-term trajectory for bullion will likely depend on upcoming US inflation data and further clarity on Federal Reserve interest rate policies for the remainder of 2026.
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