Precious Metals ETFs Under Pressure Amid Geopolitical Tensions

Silver ETFs saw a decline of up to 4% on March 27, with top performers including Groww Silver ETF (down 4.04% to Rs 21.83), HDFC Silver ETF (down 4% to Rs 212.76), DSP Silver ETF (down 3.96% to Rs 214.25), Kotak Silver ETF (down 3.75% to Rs 21.58), and Edelweiss Silver ETF (down 3.66% to Rs 222.51).

Gold ETFs also reflected weakness in the segment, with top performers including Nippon India ETF Gold BeES (down 0.92% to Rs 118.19), ICICI Prudential Gold ETF (down 1.04% to Rs 122.21), and Axis Gold ETF (down 1.05% to Rs 118.90).

MCX Gold futures remained in the green, with prices up 1.97% to Rs 1.43 lakh for 10 grams. MCX Silver futures were up 2.75% to Rs 2.26 lakh a kg.

Read also: Gold and Silver Prices Decline Amid Strengthening Dollar and Inflation Concerns

Market experts attribute the decline in ETFs to short-term pricing mismatches and investor sentiment, rather than a change in the underlying fundamentals of precious metals. The unclear situation in Iran may push inflation up and slow down the US economy, providing support for gold but also facing pressure from high interest rates and cautious policies.

Market experts recommend a structural view on investing in Silver ETFs, with a long-term perspective and diversified portfolio allocation. They suggest not exceeding 5-10% of overall portfolio allocation towards precious metals.