Gold and Silver ETFs Plunge Amid Higher Interest Rate Expectations

Gold and silver ETFs experienced sharp declines on August 31 due to hawkish comments from US Federal Reserve Chair Kevin Warsh, which strengthened expectations of higher interest rates.

The sell-off saw several gold-linked products fall up to 3.40 percent, with Invesco Gold ETF being the biggest loser at 3.40 percent. Union Gold, a commodity-gold product, followed closely with a 3.32 percent decline.

Among silver-linked products, Kotak Silver ETF recorded the steepest fall, declining 3.46 percent. Other notable decliners included Mirae Asset Silver ETF, Commodity-Silver, and UTI Silver ETF, each falling between 3.38 to 3.37 percent.

Kranthi Bathini, Director of Research at WealthMills Securities, attributed the correction in gold and silver to profit booking following Warsh's comments on inflation. He noted that while the long-term outlook for gold remains intact, near-term prices could remain volatile due to market uncertainty.