Gold and silver exchange-traded funds (ETFs) dropped sharply on Thursday, June 25 as precious metal prices remained under pressure. Among the bullions, the decline was led by silver ETF slipping 4%, while gold ETFs recorded over 2% losses.
Among silver-backed funds, Nippon India Silver ETF (SilverBees) fell as much as 3.99% fall at Rs 202.58, SBI Silver ETF dipped 3.93% to Rs 208.26, HDFC Silver ETF declined 4.01% to Rs 200.39, and Tata Silver ETF declined 3.92% to Rs 20.01, according NSE data.
In terms gold-traded funds, Nippon India Gold ETF (GoldBees) dipped as much as 2.21% to Rs 114.55 , ICICI Prudential Gold ETF fell 2.76% to Rs 117.95, SBI Gold ETF dropped 2.8% to Rs 118.17 and HDFC Gold ETF traded 2.64% lower at Rs 117.75.
The slump in ETFs come as precious metal rates slipped on Multi Commodity Exchange of India (MCX) today, June 25. The MCX gold July futures contract fell 0.53% to Rs 1,38,786 per 10 grams during early trade on Thursday, while the MCX silver July futures dropped 1.2% to Rs 2,10,519 per kg. The MCX rate drop mirrored decline prices of bullions in the global markets with gold prices extended its fall a day after US dollar advanced and amid possibility of interest rate hike.
Why Are ETFs Falling?
The recent fall in gold and silver ETFs is being driven by expectations of higher U.S. interest rates and a stronger dollar, which reduce the appeal of precious metals as safe-haven assets. Silver ETFs have fallen more than gold ETFs because silver is more volatile and is also tied to industrial demand, making it more vulnerable.
According to Harshal Dasani, Business Head at INVasset PMS, "The correction in gold and silver ETFs is not just a bullion price move; it is a reset in the rate trade. Precious metals are reacting to a stronger dollar, rising US rate-hike expectations, and the unwind of crowded safe-haven positions after a sharp rally earlier in the cycle. Gold ETFs have corrected, but silver ETFs have underperformed because silver is a higher-beta metal. It carries both precious-metal demand and industrial-demand expectations, so when liquidity tightens and risk appetite fades, the fall is sharper."
Has the bullion outlook changed for Indian investors?
The expert noted that the recent correction does not weaken the long-term investment case for gold, which continues to serve as a hedge against currency fluctuations, geopolitical risks, and portfolio volatility. However, silver prices may remain more sensitive.
"For Indian portfolios, this does not break the strategic case for gold. Gold still has a role as a currency hedge, geopolitical hedge, and portfolio diversifier. But the near-term risk-reward has turned more tactical than structural. When the market starts pricing higher real rates, non-yielding assets face valuation pressure. Silver needs even more discipline because its moves are amplified by positioning and industrial cycle expectations," Dasani said.
"The lesson is not to abandon precious metals, but to separate allocation from momentum. Gold remains the cleaner defensive allocation. Silver can deliver sharper upside in a reflation cycle, but in a dollar-led tightening scare, it will also correct harder. This is a volatility reset, not a collapse in the long-term bullion thesis," he added.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
