Gold and silver exchange-traded funds (ETFs) witnessed a sharp selloff on Friday, plunging up to 10% as a stronger-than-expected US jobs report pushed the dollar higher and reduced hopes of near-term interest rate cuts.
The rally in the US dollar weighed heavily on precious metals, making dollar-denominated assets more expensive for global investors and dampening demand.
Sharp Fall in Silver ETFs
Silver ETFs bore the brunt of the correction. Kotak Silver ETF dropped nearly 10% during the session, touching an intraday low of ₹225.11. Edelweiss Silver ETF, SBI Silver ETF, and Zerodha Silver ETF also declined by as much as 9%.
Gold ETFs Also Under Pressure
Among gold funds, Tata Gold ETF fell around 6%, while SBI Gold ETF and Nippon India Gold ETF slipped approximately 4% each.
The correction followed a strong US January jobs report, which strengthened the dollar and curbed expectations that the Federal Reserve would soon cut interest rates — a move that typically supports gold prices.
Global Commodity Markets See Volatility
In international markets, spot gold rebounded about 1% to trade near $4,966 per ounce after falling more than 3% in the previous session and briefly slipping below the $5,000 mark. Spot silver climbed 2.1% to around $76 per ounce, recovering from an 11% decline earlier in the week.
Market experts attribute the volatility to multiple global factors, including US inflation data, geopolitical developments, and shifting expectations around global monetary policy.
What Should Investors Do?
1️⃣ Adopt SIP for Volatile Metals
Abhishek Bhilwaria, an AMFI-registered mutual fund distributor, suggests that investors should consider investing through a Systematic Investment Plan (SIP), particularly in silver, which tends to show sharper price swings.
By investing fixed amounts regularly in gold or silver ETFs, investors can average out volatility and avoid the risk of entering at peak levels. He recommends maintaining a 10–15% allocation in precious metals as a hedge within a diversified portfolio.
2️⃣ Avoid Aggressive Fresh Positions
Manoj Kumar Jain of Prithvi Finmart cautioned that bullion markets are currently highly volatile due to global economic and geopolitical triggers. He expects gold to hold support near $4,770 per ounce and silver around $65 per ounce but advises against aggressive fresh buying at current levels.
3️⃣ Stay Prepared for Continued Swings
Jigar Trivedi of IndusInd Securities noted that silver remains under pressure despite stabilizing near $76 per ounce and could mark its third consecutive weekly decline. Gold, meanwhile, is navigating elevated volatility amid shifting macroeconomic signals.
The Bottom Line
The recent correction highlights the sensitivity of precious metals to currency movements and interest rate expectations. While long-term investors may consider gradual exposure through SIPs, short-term traders should brace for continued volatility.
Precious metals remain a strategic hedge, but disciplined allocation and staggered investing are key in the current uncertain environment.
Originally published on 24×7-news.com.
