Gold, silver ETFs fall on Diwali as global prices ease after record rally; check key details 

Amid a remarkable bull run in 2025, silver and gold ETFs eased on Diwali (October 20), witnessing sharp corrections as prices fell globally.

By mid-October, silver prices in the overseas markets had surpassed the $50/ounce mark on the back of a severe demand-supply mismatch due to heightened industrial demand for the white metal. However, silver began cooling down since around October 16.

On Friday, October 17, silver rates in domestic markets fell nearly ₹7,000. On Diwali, October 20, silver prices declined by 7% to ₹1,60,100 per kg from ₹1,71,275 per kg before, according to the India Bullion and Jewellers Association (IBJA). 

In line with the fall in silver prices, silver Exchange Traded Funds (ETFs) fell by up to 7.9% on Monday. Groww Silver ETF fell by 7.98%, while HDFC Silver ETF and Axis Silver ETF fell by 7.87% and 7.78%, respectively. 

This shows that the market is gradually rationalising and ETFs are finally trading at fair value. As per market reports, this is because demand and physical shortage are easing. 

Silver eases in India: Key factors

• The physical market was extremely overheated, with very tight supply and large premiums. Now, premiums have eased, reducing the extreme upside and giving markets some relief.

• Some ETFs were trading below their iNAVs (indicative NAVs), meaning ETF market prices fell more than the underlying physical commodity price.

• A strong rally is generally followed by profit booking, which is another reason why corrections were seen in the market.

The correction, however, could be short-term. The rally seems to be at a pause and not an end, reports suggest. With rising investment demand and industrial use of the white metal, the silver might rise again. 

Gold ETFs

In addition to silver ETFs, gold ETFs also fell by over 4% on October 20. Gold prices in India remained stable at near ₹1.3 lakh/10 gram on Monday, showing signs of an easing market. 

LIC MF Gold ETF fell by 4.13%, while Aditya Birla Sun Life Gold ETF and Edelweiss Gold ETF fell by 3.9% and 3.3%, respectively. 

Gold prices surged to lifetime highs in October, which is why many traders chose to book profits, causing ETF prices to drop even if the underlying gold price remained elevated.

On October 20, gold ETFs’ premiums fell, causing a decline in ETF market prices. While domestic gold prices were trading up, there was a minor pullback in the physical gold market, causing a drop in ETFs.  

Spot gold prices

Spot gold slipped on Tuesday, as investors booked profits and the dollar appreciated. This comes after the yellow metal hit a fresh all-time high on Monday on the back of US Federal Reserve rate cut hopes and strong safe-haven demand. 

Spot gold was trading 0.7% down at $4,323.69 per ounce on Tuesday morning, as per a Reuters report, after hitting an all-time high of $4,381.21 on Monday. Spot silver dropped 1.8% to $51.54 per ounce. 

"Profit-taking moves and an abating of safe-haven flows combined to just take the edge off the gold price today... any pullbacks on gold will be viewed as buying opportunities whilst the Fed remains on their current rate-cutting trajectory," the Reuters quoted KCM Trade Chief Market Analyst Tim Waterer as saying. 

Markets are eyeing a 25 bps rate cut in the Fed’s October meeting, as well as in December, according to the CME FedWatch Tool. Gold, a non-yielding asset, tends to do well in a low-interest-rate environment, the Reuters report noted. 

Futures contracts

On Friday, October 17, gold futures for the December delivery were at a lifetime high of ₹1,32,294 per 10 gram on the Multi Commodity Exchange, up 1.8% (₹2,442). Silver contracts for the December expiry were also at an all-time high of ₹1,70,415 per kg on Friday, up 1.6% (₹2,752).  

On Monday, gold December contracts closed at ₹1,30,624 per 10 gram on the MCX, while silver contracts ended at ₹1,57,987 per kg. 

To sum it up

After a record-breaking rally, silver and gold ETFs witnessed sharp corrections on Diwali, October 20, in line with a global decline. Silver ETFs declined by nearly 8%, while gold ETFs fell by over 4% in the Indian markets, mainly due to profit-booking and easing premiums. 

As per market analysts, the correction is short-term, and the metals could see an extended bull run in the coming months.