Indian silver exchange-traded funds experienced dramatic gains as the precious metal approached the psychological $100 barrier, with Tata Silver ETF leading the charge with a 17% surge. The rally comes as silver hit fresh record highs near $99 per ounce in international markets, recovering from previous day's profit booking amid supportive market conditions.

Silver ETF Performance Shows Strong Momentum

The silver ETF space witnessed significant activity across major funds during the trading session:

According to Jigar Trivedi, Senior Research Analyst at Reliance Securities, "Silver jumped nearly 3% toward $99/oz, reaching new record highs as a weakening dollar provided additional support to the rally in precious metals." The analyst noted that investors sought real assets as the dollar suffered from shifting US-Europe geopolitical dynamics and growing concerns about Europe potentially weaponizing its substantial US asset holdings.

Market Drivers Support Precious Metals Rally

The silver surge was supported by multiple fundamental factors including ongoing geopolitical risks, US dollar weakness, and market expectations of Federal Reserve rate cuts. The US Federal Reserve is widely expected to maintain current interest rates in the upcoming meeting, though markets continue pricing in two potential rate cuts later this year.

Industrial demand remains exceptionally strong from key sectors including solar energy, electric vehicles, AI infrastructure, and electronics. This demand has been further amplified by safe-haven flows and inflation-hedge positioning, while China's tightening export controls have added supply-side pressure.

Technical Outlook Points to Higher Targets

Ponmudi R, CEO of Enrich Money, provided an optimistic technical assessment: "Silver has surged to fresh all-time highs near $98. A decisive breakout beyond $99–$100 can quickly propel prices toward $102–$104 and beyond." The analyst highlighted that the medium-to-long-term outlook remains exceptionally bullish, with potential to test $110–$120 amid supply tightness and accelerating industrial consumption.

For domestic markets, MCX Silver continues to exhibit strong momentum with specific price targets:

Extreme Volatility Characterizes ETF Trading

Despite the overall positive momentum, silver ETFs have demonstrated extreme volatility with sharp swings in both directions. The funds experienced significant divergence from underlying asset prices, with ETF prices determined more by demand and supply of units rather than actual silver prices. Previous trading sessions saw silver ETF prices fall 20% amid panic selling, which was substantially sharper than the 2-3% decline in MCX prices.

This divergence underscores the volatile nature of silver ETFs, whose net asset values sometimes trade at abnormally steep premiums or discounts to their indicative NAVs. Market participants noted that the funds are known to swing violently in both directions.

Trading Strategy and Market Outlook

Manoj Kumar Jain of Prithvi Finmart expects continued volatility in gold and silver prices amid dollar index fluctuations, ahead of the Bank of Japan policy meeting and ongoing geopolitical tensions. The analyst provided specific trading levels for market participants:

Jain recommended buying silver on every dip until it holds ₹3,04,000 on a closing basis, with targets of ₹3,35,000-₹3,44,000-₹3,50,000. Trivedi added that MCX Silver March prices are likely to appreciate to ₹3,35,000 per kg in tandem with the positive undertone in world markets.

Gold prices are showing strong bullish momentum across both international and domestic markets, with spot gold targeting the significant $5,000 level while MCX gold demonstrates robust technical strength. The precious metal's rally is being supported by a combination of favorable macroeconomic conditions including a weakening US dollar, declining Treasury yields, and expectations of further monetary policy easing.

MCX Gold Technical Analysis

MCX gold has exhibited strong price action with significant technical developments. According to Abhishek M Pelu, Research Analyst at Way2Wealth Brokers, the domestic gold market witnessed robust buying interest near key technical levels.

The technical analysis reveals that prices declined initially but found strong support near the 10-day exponential moving average, triggering a sharp recovery that closed with a bullish candlestick pattern. ICICI Securities analysts project MCX Gold February contracts to rise towards ₹158,500-₹159,000 levels, provided prices maintain above the ₹153,000 support level.

International Gold Market Outlook

Spot gold is positioned to trade with a positive bias, targeting the $5,000 level driven by multiple supportive factors. ICICI Securities research indicates that the weakening dollar and softening US Treasury yields are primary catalysts for the upward movement.

The market sentiment is being further bolstered by expectations of two additional rate cuts during the year, which typically reduces the opportunity cost of holding non-yielding assets like gold.

Central Bank Activity and Global Developments

Central bank purchasing activity continues to provide fundamental support for gold prices. The National Bank of Poland has approved a significant acquisition plan to purchase up to 150 tons of gold, which would increase the country's total holdings to 700 tons. This institutional demand reflects the ongoing trend of central banks diversifying their reserves amid global economic uncertainties.

Geopolitical factors are also contributing to the precious metals rally, with European lawmakers halting approval of the EU-US trade agreement reached in July, creating additional market uncertainty. Concerns regarding Federal Reserve independence and fiscal policy uncertainties are providing additional support for safe-haven demand.

Market Expectations and Key Events

Nirmal Bang Securities analysts note that gold and silver prices are trading higher on international exchanges, with gold reaching all-time highs near $5,000 per ounce. The analysts expect precious metals prices on Indian exchanges to trade in a range-bound to higher pattern.

Upcoming market events include the Bank of Japan monetary policy meeting and significant US economic data releases, which are expected to influence gold price volatility while maintaining the overall upward bias. The combination of technical strength, supportive macroeconomic conditions, and institutional demand suggests continued positive momentum for both spot and MCX gold prices.