Gold and silver exchange-traded funds (ETFs) declined sharply in Monday’s trade amid steep selling seen in precious metals. A spike in bond yields and the increased possibility of US Federal Reserve rate hikes pulled gold and silver prices in domestic and global markets.
MCX Gold October futures lost over ₹4,000 per 10 grams or 2.72 per cent to ₹1,46,784, while the Silver December futures were down ₹8,500 per 1 kg or 3.61 per cent at ₹2,26,230 in the afternoon trade.
Ashish Rajodiya, head – commodities, PL Capital, said the pressure is coming from a sharp US Treasury bond selloff — the 10-year yield at 5.13 per cent, its highest since 2007, and the 30-year at 5.44 per cent, its highest since 2004 — as CME FedWatch data shows markets now pricing a 68.1% probability of a 25-basis-point Federal Reserve rate hike at the October 28 meeting, up from just 31.9 per cent odds of holding steady, on the back of strong economic data and energy-driven inflation concerns tied to the ongoing US-Iran standoff over the Strait of Hormuz.
“Elevated crude prices, rather than boosting gold’s safe-haven appeal as they typically would during geopolitical stress, are instead reinforcing the case for further Fed tightening, feeding a stronger dollar and steeper yield curve that both work against non-yielding bullion,” he said.
In tandem with the decline in precious metals, the decline in gold ETFs was lower but still elevated at over 3 per cent. Axis Gold ETF was down 3.3 per cent, Gold Bees lost 2.83 per cent, and ICICI Prudential Gold ETF declined 2.98 per cent. Other gold ETFs were also down over 2.4-3 per cent at the time of writing this report.
Gold & silver outlook
Persistent weakness in bullion prices could further pressurise the gold and silver ETFs.
Ponmudi R, CEO, Enrich Money, said the bias has turned negative for gold, with a sustained move above ₹150,000 needed to stabilise the setup. A decisive break below ₹148,000 could expose the metal to further downside toward ₹146,000, he cautioned.
As for silver, a sustained move above ₹232,000 is needed to stabilise the structure. “A decisive break below ₹228,000 could expose the metal to further downside toward ₹224,000.”
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