Silver ETFs Plunge Nearly 5% as US-Iran Tensions and Dollar Strength Force Precious Metals to Multi-Week Lows

Silver ETFs Plunge Nearly 5% as US-Iran Tensions and Dollar Strength Force Precious Metals to Multi-Week Lows​

Gold and Silver ETF Prices Fall Amid Geopolitical Tensions​

Gold and silver exchange-traded funds (ETFs) faced significant pressure on Wednesday, recording a sharp decline following renewed geopolitical tensions between the United States and Iran. The market downturn was driven by crude oil prices rising, the strengthening US dollar, and increased concerns that global interest rates may remain elevated for an extended period.

Silver ETFs saw a dramatic pullback, with funds declining nearly 5 percent in morning trading. Meanwhile, gold-linked products also corrected sharply, tracking the global weakness in precious metals.

Snapshot of Precious Metal ETF Declines​

The decline was consistent across major gold and silver ETFs. Nippon India Gold BeES (GOLDBEES) slipped 3.1 percent, settling at Rs 121.54. ICICI Prudential Gold ETF (GOLDIETF) fell 3.3 percent to Rs 125.69, while SBI Gold ETF (SETFGOLD) declined 3.2 percent to Rs 125.33.

In the silver category, selling pressure was intense. SBI Silver ETF (SBISILVER) dropped 4.8 percent to Rs 226.08. Nippon India Silver ETF (SILVERBEES) and Tata Silver ETF (TATSILV) also saw a 4.8 percent drop, trading at Rs 220.89 and Rs 22.42 respectively.

Global Bullion Markets Hit Multi-Week Lows​

The weakness in the domestic ETFs directly reflected declines in international bullion markets. Spot gold fell 1.9 percent to $4,181.04 an ounce on Wednesday. This decline marked a significant correction, as the metal had touched its lowest level since March 23. US gold futures for August delivery also followed suit, declining 1.9 percent to $4,204.70 per ounce.

Spot silver faced similar pressure, falling 2.1 percent to $64.01 per ounce. Platinum and palladium metals were also noted trading lower during the session.

Market Dynamics Driving Precious Metal Sell-off​

Market participants cited a combination of escalating geopolitical tensions, coupled with rising oil prices and the strengthening US dollar. The renewed hostilities between the US and Iran drove crude oil prices up approximately 1 percent.

This development raised fears that inflationary pressures could intensify, potentially delaying any easing in monetary policy across major economies. The dollar strengthened alongside higher oil costs, which increased the expense of gold and silver for holders of other currencies, thus reducing demand.

Domestic Bullion Prices Against Equity Market​

Domestically, bullion prices mirrored this global softness. On June 10, the price of 24-carat gold in Delhi stood at Rs 1,49,630 per 10 grams, and silver traded at Rs 2,35,520 per kg.

This downward trend occurred despite a generally positive trading session for equity markets. At 10:29 am, the Sensex was up 300 points, and the Nifty gained nearly 76 points. However, the buoyant sentiment in equities proved insufficient to bolster gold and silver-linked investment products against their sharp correction.