Gold, silver ETFs off day's low, still down 4% amid hawkish Fed stance

Gold exchange-traded funds (ETFs) fell up to 8 per cent on Monday, August 31, following Kevin Warsh’s first speech as Federal Reserve Bank chairman at Jackson Hole, where he noted that curbing inflation is the central bank’s top priority. Fed’s hawkish stance boosted market expectations for a rate hike next month leading to a decline in safe haven assets. 

 

In the spot market, gold prices declined around 1.22 per cent to ₹1,54,940 per 10 grams. Meanwhile, silver futures fell 0.5 per cent to ₹2,40,011 per kg

 

Silver ETFs were trading under pressure, with Nippon India Silver ETF emerging as the biggest laggard among the listed silver ETFs; at the last check, the ETF was down 3.25 per cent. However, it had crashed 4.7 per cent intraday. Meanwhile, Aditya Birla Sun Life Silver ETF followed, declining 4.16 per ent intraday, while HDFC Silver ETF fell 4.3 per cent.

 

 

Other silver ETFs also traded lower, with Tata Silver Exchange Traded Fund and ICICI Prudential Silver ETF falling in the range of 3-4 per cent at last check.

 

Gold ETFs too were in the red; among the pack, Aditya Birla Sun Life Gold ETF slipped 8 per cent intraday, followed by Quantum Gold ETF, which declined 5 per cent; Nippon India ETF also lost 4 per cent intraday.

 

Other gold ETFs remained weak, with SBI Gold ETF and Tata Gold Exchange Traded Fund falling in the range of 2-4 per cent at last check.

 

Notably, Warsh didn’t signal his support for a hike explicitly; he warned inflation isn’t meaningfully slowing and that policymakers must be confident it is. Otherwise, he said, they had “work to do.” 

 

 Financial conditions, he added, weren’t restraining the economy, and he described interest rates as the Fed’s “predominant tool” for achieving its mandate.

 

“Here is my standard: We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do. That’s our job,” he said.