Silver ETFs decline as interest rate concerns weigh on precious metals

Silver-focused exchange-traded funds across India's investment landscape registered broad-based declines on Tuesday, with losses ranging from 2 to 3 per cent. HDFC Silver ETF fell 2.7 per cent, while Tata Silver ETF, SBI Silver ETF, Kotak Silver ETF, UTI Silver ETF, Axis Silver ETF, Mirae Asset Silver ETF, and DSP Silver ETF each declined by more than 2 per cent during the trading session.

The pullback reflects mounting concerns over monetary policy tightening, which continues to weigh on precious metals despite their traditional status as inflation hedges and safe-haven assets. Expectations of elevated interest rate regimes have prompted investors to reassess their positions in non-yielding commodities, as higher borrowing costs raise the opportunity cost of holding silver.

Market analysts attribute the broad-based selloff to a shift in investor sentiment, where macroeconomic headwinds tied to monetary policy are overshadowing conventional demand drivers for silver. The simultaneous decline across multiple ETF providers suggests systematic repositioning rather than fund-specific movements, indicating a market-wide reassessment of precious metals valuations.

The pressure on silver ETFs comes as global commodity markets contend with competing forces between economic slowdown concerns and inflation persistence. Investors in India's precious metals space are closely monitoring central bank communications for signals on future policy direction.