SilverETF – Sudden Futures Crash Triggers Steep Losses Across Precious Metal Funds

SilverETF – Precious metal exchange-traded funds experienced a sharp downturn on Thursday after a sudden slump in futures trading erased gains recorded earlier in the week. The steep correction was led by silver-based funds, which bore the brunt of investor sell-offs following a dramatic decline in silver futures prices. The market movement resulted in one of the most turbulent trading sessions witnessed in recent months, catching many investors off guard.

Market Reaction to Futures Collapse

The sell-off began in early trading on the Multi-Commodity Exchange, where silver futures witnessed a sharp decline, setting off a ripple effect across related investment products. March silver contracts tumbled close to 10 percent, falling to nearly Rs 2,43,000 per kilogram. This marked a sudden reversal from recent price peaks that had encouraged short-term optimism among traders.

Gold futures also declined but showed relatively lower volatility. April gold contracts slipped approximately 3 percent, trading around Rs 1,48,500 per 10 grams. The fall in futures prices triggered immediate adjustments in ETF valuations as these instruments are closely linked to real-time commodity pricing.

Silver ETFs Face Broad-Based Losses

The decline in silver futures was mirrored across multiple silver-focused ETFs, most of which recorded double-digit losses. Several funds saw sharp erosion in value, highlighting the sector’s vulnerability during sudden commodity price swings.

Among the most impacted were Kotak Silver ETF and Edelweiss Silver ETF, both witnessing significant one-day losses exceeding 13 percent. Mirae Asset and HDFC silver funds also registered notable declines, dropping by more than 12 percent. Other prominent silver ETFs offered by ICICI Prudential, SBI, DSP, Nippon India, Axis, Tata, Zerodha, Aditya Birla Sun Life, UTI, Groww, Motilal Oswal, Bandhan, and 360 ONE recorded losses ranging between roughly 10 percent and 15 percent. The widespread fall indicated heavy liquidation and rapid withdrawal of investor positions across the silver ETF segment.

Gold ETFs Display Relative Stability

Gold-based ETFs also declined during the session, though their losses remained comparatively contained. Most gold funds tracked the movement in domestic gold futures, resulting in moderate declines.

Invesco India, Edelweiss, Axis, and Motilal Oswal gold ETFs reported losses in the range of 4 percent to 4.5 percent. Meanwhile, DSP, Mirae Asset, ICICI Prudential, SBI, HDFC, Quantum, and Bandhan gold ETFs experienced slightly milder declines. The comparatively smaller losses underscored gold’s traditional reputation as a more stable precious metal investment during periods of market uncertainty.

Diplomatic Developments Influence Investor Sentiment

A key factor behind the sudden market shift was the easing of safe-haven demand after confirmation of upcoming diplomatic discussions between the United States and Iran. Officials from both nations acknowledged scheduled talks in Oman, which led to a reduction in geopolitical anxiety among investors.

Market participants began unwinding defensive investment positions that were built during earlier tensions. While negotiations between the two countries remain complex, particularly due to differences over nuclear issues and missile programmes, the mere announcement of dialogue contributed to reduced demand for precious metals, which are often seen as protective assets during global uncertainty.

Global Trends Intensify Pressure on Silver

International market trends further amplified the downward momentum. Spot silver prices dropped sharply in global trading, plunging as much as 16.6 percent after briefly rising above the $90 per ounce level during Asian trading hours. The scale of this fall highlighted silver’s sensitivity to speculative trading and rapid changes in global market sentiment.

Spot gold also declined in international markets, slipping around 3.5 percent. However, gold’s relatively smaller decline reinforced its status as a comparatively less volatile precious metal compared to silver.

Investor Outlook Remains Cautious

Financial market observers noted that ETF prices reacted quickly as investors rushed to limit their exposure to volatile commodities. The sharp correction once again highlighted the risks linked with commodity ETFs, especially those connected to silver, which often experiences exaggerated price swings during shifts in global economic sentiment.

With geopolitical developments continuing to influence commodity markets, investors are expected to closely monitor global cues and futures price trends in the coming days before making further investment decisions.