Gold and Silver ETFs Crash as Fed Rate Hike Expectations Soar
Gold and silver exchange-traded funds (ETFs) plummeted by up to 4% on August 31, as precious metal prices fell under pressure from hawkish comments made by US Federal Reserve Chair Kevin Warsh.
The remarks, made at the annual Jackson Hole conference, strengthened expectations of an interest-rate hike and pushed bond yields higher. This reduced the appeal of non-yielding assets like gold and silver, causing their prices to drop.
Silver ETFs saw the steepest decline, with SBI Silver ETF falling 4.05% to Rs.226.55 and Nippon India Silver ETF (Silver BeES) dropping 4.06% to Rs.221.07. Gold ETFs also came under pressure, with ICICI Prudential Gold ETF falling 3.59% to Rs.130.75.
The sell-off was exacerbated by a combination of aggressive profit-taking, weak global cues, rising US bond yields, and escalating tensions between the US and Iran, which pushed energy prices higher and raised concerns about a fresh inflation flare-up.