Gold, silver ETFs slip up to 3% as crude surge, weak Iran talks dent sentiment. What should investors do?

Silver and gold ETFs slipped up to 3% on Thursday after bullion prices opened sharply lower on the Multi Commodity Exchange of India (MCX), pressured by rising crude oil prices that intensified inflation concerns and raised expectations of interest rates staying elevated for longer. Investor sentiment also remained cautious amid limited progress in peace talks between the United States and Iran.

Among the 18 silver ETFs, Kotak Silver ETF and Mirae Asset Silver ETF declined the most, around 3% each, whereas the other 16 ETFs, including HDFC Silver ETF, SBI Silver ETF and Nippon India Silver ETF, declined around 2% each.

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Rajesh Minocha, a Certified Financial Planner (CFP) and Founder of Financial Radiance, told ETMutualFunds that the decline of Gold & Silver ETFs was driven by rising crude oil prices, which raised inflation concerns and led to higher interest rate expectations, negatively affecting gold and other non-yielding assets. Additionally, stalled Iran negotiations and a stronger dollar further weakened market sentiment.

He further said that investors should avoid overreacting, as current market fluctuations are temporary and do not undermine its fundamentals and they should continue to maintain existing holdings either directly in ETFs or commodity funds, or through multi-asset funds.

There were 26 gold ETFs, among which Tata Gold ETF and Baroda BNP Paribas Gold ETF corrected 3% each, whereas the other 24 ETFs in the category fell between 1% and 2% on Thursday.

In the domestic market, MCX silver futures for May 2026 delivery tanked Rs 6,144 or 2.4%, to Rs 2,42,220 per kg. Gold futures for June 2026 delivery declined Rs 938 or 0.7% to Rs 1,51,719 per 10 grams. In the previous session, silver rose nearly 2% or Rs 4,000, while gold ended flat.

Rising crude oil prices tend to fuel inflation by increasing transportation and production costs, which in turn raises the likelihood of higher interest rates. Although gold is traditionally seen as a hedge against inflation, higher interest rates reduce its appeal by making yield-bearing assets more attractive.

Globally, yellow metal spot prices declined 0.7% to $4,705.09 per ounce as of 0215 GMT, while US gold futures for June delivery were down 0.6% at $4,722.10. Meanwhile, spot silver fell 1.4% to $76.64 per ounce.

Abhishek Bhilwaria, AMFI registered MFD shared with ETMutualFunds that for April 2026, investors should prioritize patience and discipline as the Indian stock market navigates a phase of short-term volatility driven by global geopolitical tensions and rising crude oil prices.

"Rather than reacting to daily market swings, a measured strategy involves maintaining existing SIPs to leverage rupee cost averaging and potentially using dips to selectively increase exposure to fundamentally strong large-cap stocks or defensive sectors like pharma and FMCG. For those seeking stability amid high valuations in mid and small caps, diversifying into multi-asset allocation funds or Hybrid funds can help manage downside risk while keeping long-term wealth creation goals on track," Bhilwaria further said.

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Manoj Kumar Jain of Prithvi Finmart said both gold and silver are witnessing sharp price swings and expects silver to hold its key support at $64 per troy ounce, while gold is likely to sustain above $4,550 per troy ounce on a weekly closing basis.

Jain advised investors to book profits in existing long positions in gold and silver and wait for corrective dips before initiating fresh long trades.

(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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