Gold and Silver ETFs Plunge on Rising US Interest-Rate Expectations

Gold and silver exchange-traded funds (ETFs) saw significant declines on Friday, with silver ETFs falling more sharply than their gold counterparts. Among gold ETFs, Invesco India Gold was the biggest decliner, dropping 1.01%, while other gold ETFs like SBI Gold, Axis Gold, HDFC Gold, and ICICI Prudential Gold also traded lower.

Nippon India Gold BeES, one of the most actively traded gold ETFs, declined by 0.75% to ₹125.25. In contrast, silver ETFs saw a steeper correction, with ICICI Prudential Silver ETF falling as much as 3.09% to ₹226.47.

The decline in precious metals has been driven by higher US interest-rate expectations and rising Treasury yields. Stronger-than-expected US producer-price data has increased bets that the Federal Reserve could maintain a tighter monetary policy stance, which typically weighs on gold and silver due to their lack of interest income.

Tushar Badjate, Director at Badjate Stock & Shares Pvt Ltd, noted that gold and silver have come under pressure as expectations of a US Federal Reserve rate hike at the 16 September meeting have risen sharply this week, with odds hovering around 50-60% following hotter-than-expected PPI data.

Ponmudi R, CEO of Enrich Money, said MCX Gold opened with a sharp gap down and is testing the ₹150,700, ₹150,000 support zone. He noted that domestic gold remains under pressure from the oil-driven inflation scare, while the rupee's weakness provides only a partial offset.