Gold and silver exchange-traded funds (ETFs) came under pressure on Monday, with silver ETFs falling as much as 3.6% and gold ETFs declining by more than 2%. The drop came amid a broader sell-off in precious metals as rising crude oil prices increased concerns over inflation.
Higher oil prices have added to expectations that the US Federal Reserve could maintain a tighter monetary policy or consider further interest rate hikes. This has put additional pressure on precious metals, which are sensitive to changes in interest-rate expectations.
Silver ETFs Lead the Decline
Silver ETFs recorded the sharpest fall among precious metal funds, slipping up to 3.6% during Monday’s trading session. Gold ETFs also saw significant selling, with losses exceeding 2%.
The decline came as investors moved away from precious metals amid concerns over the impact of higher crude oil prices on inflation and future monetary policy.
Crude Oil Prices Add to Inflation Concerns
The rise in crude oil prices has become a key factor behind the recent weakness in precious metals. Higher energy costs can contribute to broader inflationary pressures, which in turn may influence the US Federal Reserve’s decisions on interest rates.
Expectations of higher or prolonged interest rates can weigh on gold and silver as investors reassess the attractiveness of non-yielding assets.
Sensex, Nifty Also Under Pressure
The fall in gold and silver ETFs was accompanied by a broader risk-off trend in Indian equities.
During early trading, the Sensex dropped 975 points, or around 1.3%, to 72,920. The Nifty also declined by 310 points to 22,830 at around 12:10 pm.
The simultaneous weakness across equities and precious metals reflected a cautious mood among investors as markets responded to concerns over inflation, crude oil prices and the outlook for US monetary policy.
Disclaimer: This article is intended for informational purposes only. Market prices and investment conditions can change rapidly. Readers should verify the latest market data and consult a qualified financial adviser before making any investment-related decisions.