Gold and Silver ETFs Plummet as US Interest Rate Hike Expectations Soar

Gold and silver ETFs plummeted up to 8% on Monday after US Federal Reserve Chair Kevin Warsh's comments raised expectations of higher interest rates. Out of 26 gold ETFs, Aditya Birla Sun Life Gold ETF led the decline with an 8% drop to Rs 129.11. Other top performers in the red include Quantum Gold ETF and Nippon India ETF Gold BeES.

The sell-off was triggered by Warsh's remarks on Friday that policymakers may need to take action if inflation does not move towards the 2% target, which is now priced at a 57% chance of a rate hike in September. Higher interest rates tend to weigh on gold as they make holding the non-yielding asset less attractive.

Rajesh Minocha, a Certified Financial Planner and founder of Financial Radiance, advises investors not to panic or liquidate their holdings during this pullback. 'If the allocation remains on target, investors should maintain their strategy,' he said. 'If the allocation exceeds target, they should consider rebalancing.'