Gold prices in India took a breather on January 25, 2026, after an unprecedented rally that created new records in the bullion market. The stabilization comes after a massive surge that has put significant pressure on retail buyers and made precious metal purchases increasingly difficult for middle-class consumers.

Current Gold Rates Across Categories

The precious metal prices remained steady on Sunday, holding at the previous day's levels across all categories:

Recent Price Surge Impact

The gold market witnessed extraordinary volatility in recent days, with 22-karat gold prices surging by Rs.5,450 per 10 grams over just two days. This represents an 11% climb over a 10-day period, creating significant challenges for retail buyers. The sharp rise in precious metal prices has stunned market participants, with rates showing remarkable strength before the current pause.

MCX Futures Performance

On the Multi Commodity Exchange, gold and silver futures showed marginal declines at Friday's close:

City-wise Gold Rates on January 25

Gold prices remained uniform across major Indian cities on January 25:

International Gold Market Developments

The global gold market continued its bullish momentum, with spot gold reaching a record peak of $4,917.65 per ounce as of 01:51 p.m. ET (18:51 GMT). U.S. gold futures for February delivery settled 1.6% higher at $4,913.4 per ounce, reflecting strong international demand.

According to ICICI Commodity report, spot gold is likely to trade with positive bias toward the $5,000 level, supported by weak dollar conditions and softening U.S. treasury yields. The expectation of two more rate cuts during the year, along with fiscal concerns and uncertainty surrounding the halted EU-US trade agreement approval, continues to drive precious metal demand. Strong central bank buying patterns are expected to provide additional price support.

Gold and silver ETFs have gained popularity among Indian investors for combining stock market convenience with precious metals exposure. However, investors often find it puzzling that ETFs tracking the same underlying metal trade at significantly different prices, leading to confusion about fund performance and value.

Current ETF Price Variations

The price differences across ETFs tracking identical metals are substantial and immediately noticeable to investors:

These price variations do not indicate superior or inferior performance but reflect fundamental structural differences in fund design.

Understanding ETF Unit Structure and NAV

ETF unit prices differ fundamentally from spot metal prices. Each unit represents a specific portion of the underlying metal held by the fund, with Net Asset Value (NAV) per unit reflecting this exposure. The NAV depends on several critical factors:

• Number of units created at fund launch
• Total assets under management
• Metal exposure per unit designed by the fund

For example, ICICI Prudential Silver ETF may have similar percentage performance to Nippon India Silver ETF, but the NAV per unit differs because ICICI structured its ETF units with higher metal exposure per unit. This structural difference explains why absolute unit prices vary significantly while tracking the same commodity effectively.

Impact of Supply and Demand Dynamics

ETFs trade like stocks on exchanges, making them subject to supply and demand pressures that can cause temporary deviations from NAV. When heavy buying occurs, ETF prices may rise above NAV, creating premiums. Conversely, selling pressure can push prices below NAV, creating discounts.

These market dynamics occur because creation and redemption of units by authorized participants may not happen instantly. If large numbers of investors rush to buy Nippon India Silver ETF on a single day before additional units are created, the market price can spike above NAV. Less liquid ETFs typically experience larger temporary gaps between market price and NAV compared to highly liquid funds.

Expense Ratios and Cost Differences

Expense ratios significantly impact long-term returns and contribute to price variations between ETFs tracking identical metals:

These cost differences, combined with minor benchmark tracking deviations, result in slight NAV growth variations over time, even though both ETFs closely reflect their respective metal's performance.

Tracking Error Analysis

Tracking error measures how closely an ETF follows its underlying metal's performance over time. Even ETFs holding the exact commodity may deviate slightly from benchmarks due to fund expenses, timing differences in price calculations, currency fluctuations, and operational inefficiencies:

Lower tracking errors indicate more accurate benchmark following, explaining why some ETFs may move slightly differently relative to international metal prices despite effectively reflecting the same metal's performance.

Benchmark vs. Spot Price Differences

ETFs track benchmark reference rates rather than spot market prices, creating another source of price variation. Silver ETFs in India typically use global silver prices in USD converted to INR at prevailing exchange rates. This means even if silver rises 1% globally, Nippon India Silver ETF might show 0.98% growth while ICICI Prudential Silver ETF could show 1.02%, depending on timing, benchmark sources, and minor tracking errors.

Gold ETFs follow similar patterns, tracking international gold prices with slight variations based on benchmark calculations and currency conversions applied. Additionally, market liquidity affects ETFs, causing minor intraday deviations from NAV that are normal market behavior rather than mispricing indicators.

The price differences between ETFs tracking identical metals stem from structural factors including unit design, NAV calculations, expense ratios, and tracking methodologies rather than performance quality. Investors should focus on tracking accuracy and associated costs rather than absolute unit prices when selecting ETFs, as percentage returns relative to the underlying metal matter more than per-unit pricing.