Gold and Silver ETFs Plummet on Fed Rate Hike Bets

Gold and silver ETFs plummeted up to 4% in morning trade on Monday after hawkish comments from US Federal Reserve Chair Kevin Warsh boosted expectations of an interest-rate hike.

The sharp losses were driven by investors trimming positions in precious metals ahead of the anticipated rate move, with silver-linked exchange-traded funds bearing the brunt of the selling. Gold BeES and Silver BeES were among the top losers in the category, falling as much as 4% each.

The decline is consistent with the inverse relationship between gold and silver prices and US interest rate expectations. When interest rates are expected to rise, investors tend to shift their money towards higher-yielding assets like US Treasuries, making precious metals less attractive.