Gold, Silver ETFs Tumble as Precious Metal Prices Fall

Gold and silver exchange-traded funds (ETFs) experienced a decline on Monday, August 31, as precious metal prices fell. Nippon India ETF Gold BeES was down around 2.6% during the session, while other major gold ETFs such as ICICI Prudential Gold ETF, SBI Gold ETF, and HDFC Gold ETF were also down by similar percentages.

Silver ETFs saw a sharper decline, with Nippon India Silver ETF or Silver BeES dropping around 3% during Monday's trade. The fall in ETF prices is closely linked to the decline in underlying bullion prices, as gold and silver ETFs are designed to track the prices of the respective metals.

Gaurav Garg, head of research at Lemonn, attributed the hawkish Jackson Hole comments from Fed Chair Kevin Warsh as a key factor in increasing expectations of a September rate hike. Higher US yields and a stronger dollar tend to put pressure on non-yielding assets such as gold and silver.

The correction in precious metal ETFs also comes against a backdrop of strong investment and central-bank demand for gold. Chintan Haria, principal, investment strategy at ICICI Prudential, noted that continued purchases by central banks could provide structural support for gold demand.