Silver ETFs Slide 4%, Gold ETFs Decline 2% as Bullion Falls on Fed Fears

Mumbai, June 25: Gold and silver exchange-traded funds (ETFs) came under pressure as a sharp correction in global and local bullion prices triggered widespread losses across the precious metals space, with silver funds notably underperforming gold.

Silver ETFs underperform as industrial demand concerns add pressure

On the latest trading session, both gold and silver ETFs declined in tandem with weakness in international spot and futures prices. The sell-off marked a reversal from the strong momentum seen earlier in the year, when precious metals had benefited from expectations of monetary easing and safe-haven demand. This time, however, sentiment has shifted as investors reassess the outlook for interest rates and the US dollar. 

HDFC Silver ETF slid mirroring weakness in silver which is both precious and industrial. Source: NSE

Silver-linked ETFs bore the brunt of the correction, falling as much as 4% in some cases. The decline was more pronounced in silver compared to gold, reflecting the metal’s higher volatility and its dual nature as both a precious and industrial commodity. Funds such as HDFC Silver ETF (down 4.2%), SBI Silver ETF (down 4%), Nippon India Silver ETF (down 4%), Tata Silver ETF (down 4%) and ICICI Prudential Silver ETF (down 4%) were among those tracking the decline closely. The sharper fall in silver suggests that concerns over global growth and industrial demand may be adding an extra layer of pressure beyond macro financial factors. 

Kotak Gold ETF slid 2% faring much better than silver peers as the metal’s safe haven status arrested the slide. Source: NSE

Gold ETFs decline but show relative resilience amid safe-haven support

Gold ETFs also went lower, though losses were relatively more contained compared to silver. Schemes including Kotak Gold ETF (down 2.3%), SBI Gold ETF (down 2%) and HDFC Gold ETF (down 2%) mirrored the downward movement in bullion prices but showed comparatively greater resilience. Gold’s traditional role as a defensive asset appears to have provided some cushion, even as broader risk sentiment and macroeconomic conditions weighed on the asset class. 

Dollar strength and Fed rate outlook drive weakness in bullion prices

The key driver behind the decline has been the strengthening US dollar along with evolving expectations around US Federal Reserve policy. Markets are increasingly pricing in the possibility that interest rates may rise later this year in the US on inflation trends. Higher interest rates typically reduce the attractiveness of non-yielding assets like gold and silver, leading to capital outflows and profit booking.
 

Profit booking follows strong rally in precious metals earlier this year
In addition, the recent rally in bullion prices had pushed valuations higher, prompting investors to lock in gains as momentum began to fade. The combination of macro uncertainty, dollar strength, and technical correction pressures has resulted in a broad-based pullback across precious metal ETFs.
 

Volatility expected to persist as macro signals remain mixed

Despite the recent weakness, analysts note that volatility in gold and silver is not unusual, particularly after sharp rallies. Silver tends to amplify movements in gold due to its smaller market size and industrial linkage, which explains its relatively steeper decline in the current phase. Overall, the correction highlights the sensitivity of precious metals to shifting global monetary expectations and currency movements. 

Source: 

• https://www.nseindia.com/get-quote/equity/HDFCSILVER/HDFC-Mutual-Fund—HDFC-Silver-ETF
• https://www.nseindia.com/get-quote/equity/GOLD1/Kotak-Mutual-Fund—Gold-Exchange-Traded-Fund