Silver ETFs surge up to 37% in January despite recent crash in silver prices: Right time to buy?

Silver rate today: Silver exchange-traded funds (ETFs) rallied as much as 37% in January but witnessed a sharp selloff on Sunday, February, plunging by up to 20% as investors rushed to book profits after precious metals retreated from record highs. Silver ETFs extended losses on Sunday after tanking over 20% on Friday.

Meanwhile, silver rates extended losses and hit a 9% lower circuit on Sunday as investors continued profit booking amid a global selloff triggered by a stronger US dollar. Sentiment was further impacted after reports that CME Group is raising margins on Comex gold and silver futures. Investors also remained cautious ahead of the Union Budget 2026.

On MCX, silver prices fell 9% to the lower circuit of ₹2,65,652 per kg. This came after Friday’s sharp fall when silver prices had already collapsed 19% to ₹3.12 lakh per kg.

The sharp reversal raised a key question in the market — whether the correction presents a fresh buying opportunity or signals the end of the historic rally in the white metal.

The Rally in January

Despite the sudden fall, silver still ended January with sharp gains, rising ₹73,000, or 30.5%, from ₹2,39,000 per kg recorded on December 31, 2025. Gold too delivered a strong monthly rise. In January, gold prices increased by ₹27,800, or 20.2%, from ₹1,37,700 per 10 grams recorded at the end of last year.

The rally in precious metals was supported by persistent geopolitical strains involving the US and Iran, along with a notably weaker US dollar driven by policy uncertainty in Washington. Additional flashpoints, including U.S.–EU tariff tensions linked to Greenland, further intensified safe-haven demand for gold and silver.

Among ETFs, Zerodha Silver ETF rallied 37%, Nippon India Silver ETF surged 33%, Kotak Silver ETF advanced 30% and SBI Silver ETF jumped 29% in January.

The Carnage and what triggered the crash

The impact of the selloff was visible across ETFs. SBI Silver ETF crashed 20%, while Zerodha Silver ETF, Nippon India Silver ETF and Kotak Silver ETF fell around 20% each.

In Sunday’s session as well, Silver ETFs faced a steep decline of up to 20% as SBI Silver ETF was down 20.50%, Nippon India Silver ETF lost%, and Zerodha Silver ETF 15% and Kotak Silver ETF also lost around 15%.

The reversal was triggered after US President Donald Trump indicated he would soon announce his pick to replace Fed Chair Jerome Powell, with reports pointing to former Fed governor Kevin Warsh. The prospect of a more hawkish Fed stance unnerved investors who had positioned for an accommodative policy path. The dollar index rose 0.4% to 96.60 and the greenback strengthened 0.7% against the Swiss franc.

Profit booking accelerated after Trump criticised the Fed for not easing rates, prompting traders to turn cautious at elevated levels.

At the same time, Bloomberg reported that CME Group is raising margins on Comex gold and silver futures after prices suffered their biggest slides in decades.

Margin requirements on silver futures have been increased to 15% from 11% for the non-heightened risk category, and to 16.5% from 12.1% for the heightened risk category. For gold futures, margins have been raised to 8% from 6% under the non-heightened profile and to 8.8% from 6.6% for the heightened profile. Margin hikes have also been applied to platinum and palladium futures.

What should investors do now?

Despite the sharp fall across prices and ETFs, analysts indicated that the broader structural drivers supporting precious metals had not disappeared. Silver had recorded gains for nine consecutive months, while gold had extended its rally for six straight months, supported by geopolitical uncertainty, safe-haven demand and earlier dollar weakness. The recent decline was viewed as profit booking after an exceptionally steep rally rather than a complete shift in the underlying trend.

Nikunj Saraf, CEO at Choice Wealth, said, "The 14% plunge in Gold and Silver ETFs isn’t mysterious—it’s classic profit-taking after Thursday’s record highs on MCX (Gold at ₹1,93,096/10g, Silver at ₹4,20,048/kg). A hawkish Fed chair pick under President Trump sparked global fears of tighter policy.”

He explained that the plunge reflected profit booking after record highs on MCX, as expectations around a hawkish Federal Reserve leadership strengthened the USD and pressured overbought metals. He noted that spot gold fell 3.9–5% to $5,183 per ounce and silver fell 5.7% to $109.55 per ounce, while Indian ETFs mirrored the global correction. He advised investors to diversify, avoid panic selling, and watch for rebounds supported by central bank demand, adding that long-term bulls continued to hold firm.

Meanwhile, Hareesh V, Head of Commodity Research at Geojit Investments noted a persistent global supply gap had deepened, with 2025 marking the fifth straight year of deficits, while industrial demand from solar, EVs, and AI-related electronics intensified the rally. He further noted that monetary factors, including Federal Reserve rate-cut expectations and a weakening U.S. dollar, will keep investment flows into silver.

Analysts advised investors to avoid panic selling during such sharp corrections and instead consider staggered allocations if they maintained a long-term view. Given the steep run-up and historically high volatility in silver, intermittent corrections were considered likely, especially if the dollar strengthened further or geopolitical risks eased.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.