Gold, Silver ETFs Fall Up To 4% Today: Why Precious Metal Prices Are Falling

Gold and silver ETFs came under heavy selling pressure on Monday, September 28, as a sharp fall in bullion prices hit precious metal funds. Silver ETFs fell as much as 4%, while gold ETFs declined more than 2% during the session.

The fall in gold and silver prices came as rising crude oil prices pushed inflation concerns higher and strengthened expectations of another interest-rate hike by the US Federal Reserve. Higher US Treasury yields and a firm dollar added to the pressure on bullion.

On the Multi Commodity Exchange (MCX), October gold futures fell ₹3,214 to ₹1,47,667 per 10 grams, while September silver futures declined ₹6,661 to ₹2,28,035 per kg. In the international market, spot gold fell 2.1% to $4,198.10 an ounce, while spot silver dropped 3.4% to $62.08 an ounce.

Gold, Silver ETFs Fall: Which Funds Are Down Today?

The sharp fall in silver prices was reflected in silver ETFs. SBI Silver ETF fell 3.99%, followed by Nippon India Silver ETF at 3.57%, Tata Silver ETF at 3.51% and ICICI Prudential Silver ETF at 3.44%.

Gold ETFs also traded lower. ICICI Prudential Gold ETF fell 2.92%, SBI Gold ETF declined 2.85%, Nippon India ETF Gold BeES dropped 2.80% and Tata Gold Exchange Traded Fund fell 2.67%.

The fall in ETFs came as the underlying gold and silver prices dropped sharply in domestic and global markets.

Why Is Gold Price Falling?

The main pressure on gold came from rising US bond yields and expectations of higher interest rates. The US Federal Reserve raised its benchmark interest rate by 25 basis points earlier this month, taking the target range to 3.75%-4%. Traders are now watching the possibility of another rate increase in October. According to the CME FedWatch Tool, markets were pricing in a 70.3% probability of a rate hike in October, as reported on Monday.

Higher interest rates and bond yields generally weigh on gold because the metal does not generate interest income. A stronger US dollar can also put pressure on dollar-denominated gold by making it more expensive for buyers using other currencies.

Why Is Silver Falling More Than Gold?

Silver has seen a sharper fall than gold, with spot silver declining 3.4% to $62.08 an ounce. The move in silver has also been reflected in the domestic market, where MCX silver futures fell more than ₹6,600 per kg.

Silver tends to see larger price swings than gold, and the latest fall has therefore been sharper across both the commodity market and silver ETFs.

Gold, Silver Prices Today

The rise in crude oil prices has become another factor weighing on precious metals. Brent crude prices moved higher after uncertainty over the reopening of the Strait of Hormuz increased following developments in the US-Iran conflict. Higher oil prices can add to inflation, which in turn can keep pressure on the Federal Reserve to maintain a tighter monetary policy.

That combination of higher oil prices, rising bond yields and expectations of further rate hikes has weighed on gold and silver at the start of the week.

Markets will now focus on upcoming US economic data, including job openings, the ADP employment report, PCE inflation data and non-farm payrolls, for further clues on the Federal Reserve's interest-rate path.

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