Silver ETF Divergence Sparks Buzz: SEBI Analyst Warns Of Short Pullback Before Possible $50 Breakout

The ETF reached a record NAV of ₹165 per unit, while MCX Silver December futures declined 0.75% to ₹1,48,738 per kg

Nippon India Silver ETF startled investors on Thursday as its price surged nearly 9%, despite spot silver prices slipping.

The ETF reached a record NAV (net asset value) of ₹165 per unit, while MCX Silver December futures declined 0.75% to ₹1,48,738 per kg, indicating a significant disparity between the fund and its underlying asset.

According to an Economic Times report, analysts attributed the anomaly to heavy buying pressure following silver’s all-time high above ₹1.5 lakh per kg the previous day. Market experts also warned that such demand-supply mismatches can cause ETFs to trade at steep premiums or face sharper corrections when sentiment reverses.

Silver prices globally remain near record highs around $49 per ounce, buoyed by robust industrial demand and supply deficits.

Analyst View

Silver is once again testing its 40-year resistance near the $50 mark, a level that capped its rallies in both 1980 and 2011, noted SEBI-registered analyst Rajneesh Sharma. This time, however, the setup looks far more technically sound.

A massive 13-year cup-and-handle pattern has formed since the 2011 peak, creating a long-term base that often precedes explosive breakouts. The cup is now complete, but a short-term pullback between $40 and $44 could form the handle and set the stage for a sustained move higher, Sharma noted.

The $50 level isn’t just psychological, it’s historic, the analyst said. A decisive breakout above it, supported by strong trading volume, could unleash a wave of demand from trend followers, inflation hedgers, and institutional investors.

On the other hand, a failure to hold above $47 may confirm another false breakout, leading to a prolonged period of consolidation.

The monthly relative strength index (RSI) near 81 signals strong momentum but also hints at overbought conditions, while the moving average convergence/divergence (MACD) remains firmly bullish with no divergence, Sharma said.

Technically, silver appears to be in the midst of a multi-decade “supercycle” pattern, with an eventual measured target of $85 - $95 if the breakout holds, he added.

The analyst suggests a brief correction could offer the best entry before silver attempts to rewrite its own history above $50.

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