Gold and Silver ETFs Plunge Amid Rising Oil Prices and Interest Rate Expectations
The Indian gold and silver exchange-traded funds (ETFs) experienced significant losses on Monday due to various market factors.
The decline in prices was attributed to a combination of rising crude oil prices, inflation concerns, and expectations of tighter monetary policy in the United States.
Rising oil prices have increased transportation costs and added to inflationary pressures globally. This has implications for precious metals as persistent inflation could lead central banks to maintain or increase interest rates, making non-yielding assets like gold and silver less attractive.
The US Federal Reserve's decision to raise its target interest-rate range by 25 basis points earlier this month to 3.75%-4% added pressure on precious metals. Market participants reassessed the possibility of additional rate hikes as oil prices and inflation concerns rose.