Precious metals soften as Dhanteras demand cools ETF inflows

Gold and silver prices have declined in recent trading, a counterintuitive development ahead of Dhanteras, the auspicious festival day when many Indian households traditionally purchase precious metals. The seasonal uptick in demand has not materialised as strongly as anticipated, contributing to softer valuations for both commodities.

Fund-of-fund ETFs focused on precious metals have experienced a pause in new inflows, signalling cautious investor sentiment despite the festive season. The combination of lower prices and moderated fund inflows suggests market participants are taking a more measured approach to bullion investments.

The slowdown has prompted investors to explore alternative avenues for precious metals exposure. Traditional physical purchases remain popular during Dhanteras, while some investors are considering diversified metal baskets, international ETFs, and structured products that offer different risk-return profiles.

Market analysts attribute the current weakness to a mix of factors including currency movements, global interest rate expectations, and profit-taking after previous rallies. Despite near-term softness, longer-term fundamentals for precious metals remain supported by sustained inflation concerns and central bank policies across major economies.

Investors navigating the current environment are advised to consider their medium to long-term investment horizons rather than reacting to short-term price fluctuations, particularly given the cultural significance of precious metals purchases during festive periods in India.