Silver and gold ETFs fall up to 6% amid rising crude prices and fading rate cut bets. Is this a buying opportunity?

Silver and gold ETFs dropped by 6% on Monday after gold and silver prices opened sharply lower on the Multi Commodity Exchange of India (MCX). The decline came as surging energy prices reduced expectations of near-term U.S. interest rate cuts. Rising inflation concerns and uncertainty about whether the Federal Reserve can lower rates if oil prices stay high have also weakened gold’s safe-haven appeal.

On Monday, Groww Silver ETF declined the most of around 6% to hit day’s low of Rs 23.5 against the previous close of Rs 24.99. This was followed by Kotak Silver ETF which fell 5%. The other 16 ETFs in the category went down between 3% to 4%.

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There were 25 gold based ETFs in the said time period which declined ranging between 1% to 3% on Monday.

Anup Bhaiya, Founder, Money Honey Wealth Services shared with ETMutualFunds that gold held steady at Rs 15,966/g while silver remained flat at Rs 2,75,000/kg amid dollar strength. In this corrective phase with bullish long-term outlook from Fed easing, investors should buy dips for portfolio diversification, eyeing geo-tensions.

In the international market, gold prices edged lower in early trade, with spot gold slipping 0.2% to $5,007.58 per ounce as of 0240 GMT. U.S. gold futures for April delivery also declined, falling 1% to $5,011.10. Silver followed the downward trend, with spot prices dropping 1.2% to $79.57 per ounce.

Rishi Raj Deva, Kredere Wealth told ETMutualFunds that rising crude prices amid the US-Iran conflict, which escalated further over the weekend with US strikes on Kharg Island, are dampening rate cut expectations and strengthening the dollar, weighing on gold and silver ETFs near-term.

He further said that with the Fed meeting starting March 17, volatility is likely to persist. Long-term investors can use dips to accumulate, with $5,000 remaining a key support for gold.

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Jigar Trivedi, Senior Research Analyst at IndusInd Securities, said gold is holding near the $5,000 level after declining for two consecutive weeks, while oil markets remain volatile following the US strike on Iran’s main oil export hub at Kharg Island over the weekend.

On silver, Trivedi noted that prices have slipped to around $80 per ounce, marking a fourth consecutive session of decline as the Iran war enters its third week and oil prices remain volatile. Oil initially surged after the US attacked military targets at Kharg Island and warned of potential strikes on energy infrastructure if Iran attempted to disrupt transit through the Strait of Hormuz.

(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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