Gold and Silver ETFs Gain Focus Ahead of Diwali Trading

Gold and silver exchange-traded funds are drawing attention from small investors who cannot afford to buy physical precious metals upfront during the festive season. These instruments allow buyers to purchase units through fund houses and receive returns that match physical gold and silver, though investors must watch trade volume and premiums carefully. Both gold and silver ETFs trade on the BSE and the NSE, and individuals can buy them directly on the open market using a demat account or choose the mutual fund route via a fund of funds. Market experts share positive price forecasts for the upcoming Samvat 2083 period. SEBI-registered expert Anuj Gupta notes that the current gold rate in India is around ₹1,42,500 and could reach ₹1,80,000 by the next Diwali, marking a potential rally of up to 26 percent. Meanwhile, silver sits at around ₹1,85,000 per kilogram and is projected to climb as high as ₹3,00,000 per kilogram by Diwali 2027, which would represent a rise of up to 62 percent. However, analysts stress that price predictions should not be the sole basis for choosing between the two metals. Pankaj Mathpal, CEO and MD at Optima Money Managers, explains that gold serves purely as an investment value, while silver carries both investment and industrial value. Because of its industrial use, silver can experience high volatility, whereas central banks globally hold gold to manage financial emergencies. Mathpal advises that low-risk investors should choose gold ETFs for Diwali, while individuals with a high risk appetite may look to silver ETFs for higher potential returns. Investors are also advised to examine the premium on gold ETFs before buying. If the premium is high, it is wise to avoid the asset because prices could crash further if precious metals decline. Comparing the gap between category returns and plan returns helps identify better-suited options, with funds from ICICI Prudential and Nippon India noted as popular choices in the market.

Context

Precious metal investments traditionally see heightened interest during festive periods like Diwali, particularly during Muhurat trading sessions. Exchange-traded funds offer a digital alternative to physical bullion, eliminating storage concerns while tracking market price movements closely. Financial advisers generally recommend aligning such commodity investments with one's personal risk tolerance rather than relying solely on projected price targets.