Key facts
- Gold and silver ETFs fell significantly, with some down as much as 7%.
- The declines were attributed to escalating Middle East tensions and rising inflation fears.
- US consumer inflation rose 4.2% in the 12 months through May, the fastest pace in three years.
- Crude oil prices spiked, contributing to the cautious market sentiment.
- Spot gold and silver prices saw a slight rebound later in the day.
Gold and silver ETFs experienced sharp declines on Thursday, with some falling as much as 7%, as escalating tensions in the Middle East and fears of rising inflation soured investor sentiment. Crude oil prices also saw a spike following fresh US strikes on Iran, further contributing to the cautious market mood.
SBI Gold ETF was the biggest loser, falling 7% to Rs 116.32. Other gold ETFs from Nippon India, Tata, HDFC, and Kotak also saw declines of around 6%. In total, 16 gold ETFs slipped between 1% to 5%. Among silver ETFs, all 18 listed products posted losses of up to 3%, with ICICI Prudential Mutual Fund's Silver ETF being the worst performer.
In the domestic futures market, MCX silver futures for July 2026 delivery dropped 2% to Rs 2,30,492 per kg, while gold futures for August 2026 delivery slipped 1% to Rs 1,46,444 per 10 grams.
The broader sentiment dampener for ETF demand is the threat of higher inflation. US consumer inflation increased 4.2% in the 12 months through May, the largest gain since April 2023, according to the Labor Department. This data provides ammunition for the Federal Reserve to potentially keep interest rates unchanged longer.
Internationally, spot gold prices rebounded slightly by 0.4% to $4,089.12 per ounce after hitting a six-month low earlier in the day. Spot silver also rose 0.3% to $63.86 per ounce.