Gold & Silver Rally Sparks Smart Hedging Play: Lock The Gains

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As precious metals surge, ICICI Direct advises investors to hedge—not exit—to manage downside risk while keeping upside intact.

By S JHA

Mumbai, January 24, 2026 — Gold and silver prices have witnessed strong momentum in recent periods. The trend has reflected positively on commodity holdings such as Gold and Silver ETFs. But seasoned investors know that rallies in precious metals are rarely linear—and corrections can arrive without warning.

According to ICICI Direct, investors need not rush to exit their positions amid volatility. Instead, a well-structured hedge can protect profits while allowing portfolios to stay invested in the long-term metal story.

“Instead of exiting your position, a hedge can help manage downside risk while keeping your core holdings intact,” ICICI Direct noted, underlining the importance of risk management in commodities.

When Should Investors Hedge Commodities?

ICICI Direct outlines clear situations when hedging gold and silver exposure makes strategic sense: When investors want to lock in profits without selling their holdings.

Ahead of major global events, policy signals or geopolitical uncertainty. During phases of heightened market volatility.

Choosing the Right Hedge

The brokerage highlights three commonly used hedging tools, depending on market expectations:

Futures: Lock in a future selling price to safeguard current value—ideal when volatility or a potential downturn is anticipated.
Long Put Options: Provide the right (but not the obligation) to sell at a fixed price, offering downside protection while retaining upside if prices rise.
Short Call Options: Generate premium income to cushion downside risk, best suited for sideways or mildly negative markets.

Understanding the Margin Cost

Hedging comes with capital considerations. ICICI Direct explains that: Futures and short option positions typically require margins of 10–20% of the total contract value. Long option strategies involve paying a premium, which acts as the cost of insurance.

Manage Volatility without Fear

With gold and silver attracting renewed investor interest, the message from ICICI Direct is clear: volatility should be managed, not feared. Hedging allows investors to stay invested in precious metals while insulating portfolios against sharp corrections—an approach increasingly relevant in uncertain global markets.

(This article makes no recommendation for any kind of trades in the bullion markets)