Gold and silver ETFs fall up to 3% as firm dollar and Fed rate hike bets weigh. Should investors buy the dip?

Gold and silver exchange-traded funds (ETFs) fell up to 3% on Thursday as domestic prices of the precious metals declined. A stronger dollar, which climbed to a 19-month high, and rising expectations of a Federal Reserve rate hike next month weighed on investor sentiment and put pressure on gold and silver prices.

Nearly 26 gold-based ETFs declined up to 2% each, including SBI Gold ETF, Nippon India ETF Gold BeES, HDFC Gold ETF and ICICI Prudential Gold ETF.

Around 19 silver ETFs, including SBI Silver ETF, HDFC Silver ETF, Zerodha CASE Silver ETF and ICICI Prudential Silver ETF, fell up to 3% each.


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Pallav Agarwal, Certified Financial Planner at Bhava Services LLP, shared with ETMutualFunds that gold and silver are down because US inflation came in higher than expected. Markets now expect the US central bank to raise interest rates again, and higher interest rates and a stronger dollar will make gold and silver less attractive to investors.

Agarwal further said that investors should continue to buy these through SIPs as per their long-term asset allocation.

In the domestic market, MCX silver futures for December 2026 delivery dropped around 1.3% or by Rs 2,320 to Rs 1,82,205 per kg. Gold futures for December 2026 delivery fell by Rs 635 to Rs 1,39,081 per 10 grams.

In the international market, gold prices dropped to a more than one-week low after stronger-than-expected US inflation data and hawkish remarks from Federal Reserve officials boosted the US dollar and triggered further expectations of an interest-rate hike next month. Spot gold fell 0.2% to $3,981.49 per ounce, after touching its lowest level since November 4 earlier.

Traders are now betting on a half-percentage-point Fed rate hike next month. Odds surged after data showed US inflation sped up more than expected in October and policymakers signalled a willingness to tighten policy more aggressively. Traders now see a 100% chance of a rate increase in December, higher from 84% before the release of the data, according to CME's FedWatch tool, cited by Reuters.

Manav Modi, Commodities Analyst at Motilal Oswal Financial Services, said that gold prices steadied after recovering from a sharp selloff earlier in the week, as investors reassessed the impact of hotter-than-expected US inflation and increasingly hawkish Federal Reserve signals.

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The near-term outlook remains challenging as investors await further US inflation and producer-price signals, alongside Fed commentary, he further said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times.)

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