Silver ETFs Fall Over 3% as Global Silver Extends Decline; Gold ETFs Also Slip

Silver exchange-traded funds fell more than 3% on September 11, tracking another decline in international silver prices after the metal suffered its steepest single-day fall since June in the previous session. 

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SBI Silver ETF was down 3.2% at ₹221.77, while ICICI Prudential Silver ETF and Nippon India Silver ETF lost 3.1% each to trade at ₹226.16 and ₹216.59, respectively. Tata Silver ETF also declined 3.1% to ₹21.98. 

Silver remained weak overseas as expectations of another US interest-rate increase strengthened. The metal slipped 0.3% to $63.40 an ounce on Friday, extending the pressure after a 5.5% fall on Thursday. 

US Rate Expectations Shift After Inflation Data 

The latest US producer-price numbers added to concerns that inflationary pressure may keep interest rates higher. Producer prices rose 0.4% in August, following an upwardly revised increase of 0.1% in July. 

Following the data, the probability of a Federal Reserve rate increase of at least 25 basis points the following week moved to around 70%, from about 64% before the numbers were released. 

Rising US Treasury yields and a stronger dollar have also weighed on precious metals. Gold and silver do not generate interest income, making higher yields an important consideration for investors holding the metals. 

Oil prices have added to the inflation concerns. Brent crude jumped 6% to around $107 a barrel as supply routes through the Strait of Hormuz and the Red Sea faced disruption amid the continuing conflict involving the US, Israel and Iran. 

Domestic Silver Futures Remain Under Pressure 

The weakness was also visible in the Indian futures market. Silver December futures were trading around ₹2.31 lakh per kg, down about 1.4% during the day. 

The decline has extended beyond Friday’s session, with the contract losing more than 4% over the past week. 

Gold exchange-traded funds (ETFs) also witnessed declines; however, their price declines were lower compared with that of silver funds. SBI Gold ETF fell by 1.1% to ₹128.84, whereas ICICI Prudential Gold ETF and Nippon India ETF Gold BeES declined by 1%, at ₹129.42 and ₹124.93, respectively. The fall in the price of Tata Gold ETF was 0.9% to ₹14.69. 

International gold prices were relatively steady at around $4,312 an ounce after falling nearly 2% on Thursday. Gold was heading towards a weekly decline of about 2.7%, which would mark its third consecutive weekly loss. 

Precious Metals Slip Together With Weak Performance of Stock Market 

The performance of precious metal ETFs was also poor as there was a weak day for Indian stock market. 

At 10:42 am, the Sensex fell by 543 points or 0.7% to 74,359 while Nifty dropped by 185 points or 0.8% to 23,293. 

The poor performance was reflected in almost all stocks as the number of falling stocks was more than double the number of rising stocks. 

For silver and gold ETFs, Friday’s decline followed the losses already seen in international precious metals, with higher bond yields, a stronger dollar and changing expectations around US interest rates remaining the main factors influencing prices.