Gold, silver ETFs tumble up to 4% as US Fed rate-hike bets surge; Gold BeES, Silver BeES among top losers
Silver ETFs suffered sharp losses in morning trade after hawkish comments from US Federal Reserve Chair Kevin Warsh boosted expectations of an interest-rate hike. Gold ETFs were also firmly in the red.
Gold ETFs and Silver ETFs today
Gold and silver exchange-traded funds (ETFs) came under heavy selling pressure on August 31, falling as much as 4 percent as precious-metal prices weakened after hawkish comments from US Federal Reserve Chair Kevin Warsh boosted expectations of an interest-rate hike.
Silver ETFs suffered the sharper losses in morning trade. SBI Silver ETF fell 4.05 percent to Rs 226.55, while Nippon India Silver ETF, or Silver BeES, dropped 4.06 percent to Rs 221.07. Tata Silver ETF declined 3.98 percent to Rs 22.44 and ICICI Prudential Silver ETF slipped 3.87 percent to Rs 231.21.
Gold ETFs were also firmly in the red. ICICI Prudential Gold ETF fell 3.59 percent to Rs 130.75, SBI Gold ETF declined 3.50 percent to Rs 130.30 and Nippon India ETF Gold BeES dropped 3.48 percent to Rs 126.30. Tata Gold ETF was down 3.19 percent at Rs 14.87.
The sell-off tracked weakness in the underlying precious metals after Warsh reiterated at the Federal Reserve’s annual Jackson Hole conference that policymakers remained committed to returning inflation to the central bank’s 2 percent target.
The remarks strengthened expectations of tighter US monetary policy, with traders now pricing in a more than 50 percent probability of a rate increase at the Fed’s September meeting. Higher interest rates and bond yields typically weigh on non-yielding assets such as gold and silver.
International gold extended its decline on Monday after tumbling more than 3 percent on Friday, its steepest fall since early June. Spot gold was down 0.7 percent at $4,422.75 an ounce in Singapore trade, while silver declined 0.4 percent to $66.12 an ounce.
Precious metals also faced a complicated macro backdrop after fresh fighting between the US and Iran pushed oil prices higher. The US military struck Iranian rocket launchers on Sunday, marking the first American military action against Iran in more than a month. The resulting rise in crude prices added to inflation concerns at a time when markets were already reassessing the outlook for US interest rates.
Domestic bullion prices followed the global weakness. MCX gold was trading 1.14 percent lower at Rs 154,496 per 10 grams around 9:10 am, while MCX silver futures fell about 1.28 percent to Rs 239,341 per kg.
The decline in precious-metal ETFs was also substantially steeper than the broader equity-market fall. At 10:11 am, the Sensex was down 423 points, or 0.55 percent, at 76,842, while the Nifty 50 fell 159 points, or 0.66 percent, to 24,016. Market breadth was weak, with 1,346 shares advancing against 2,232 declines.
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