Gold, Silver ETFs soar as safe haven assets gain on West Asia concerns

Gold and silver exchange-traded funds (ETFs) rallied on Monday as investors flocked to safe-haven assets amid escalating geopolitical tensions in West Asia, tracking gains in underlying precious metal prices. 

Silver ETFs saw a sharp rally on Monday, with HDFC Silver ETF rising 8.5 per cent, Kotak Silver ETF gaining 8 per cent, Nippon India Silver ETF and ICICI Prudential Silver ETF both climbing nearly 9 per cent, SBI Silver ETF advancing 8.3 per cent, and Axis Silver ETF jumping 8.9 per cent. 

Gold ETFs also posted strong gains, with Aditya Birla Sun Life Gold ETF rising 5.2 per cent, Axis Gold ETF up 5.5 per cent and Tata Gold ETF jumping 9 per cent. Nippon India Gold ETF gained 7.9 per cent, while LIC MF Gold ETF rose 7 per cent and DSP Gold ETF added nearly 6 per cent. 

 

The ETFs were taking cues from gains in gold and silver prices. Multi-Commodity Exchange (MCX) gold April 2 futures are up 3.12 per cent to ₹1,67,155 per 10 grams on Monday, while the May 5 contracts for MCX silver gained 3.05 per cent to ₹2,91,275 per 1 kg.  

So far this year, MCX spot silver has rallied 16 per cent and gold has gained nearly 19.5 per cent, according to data compiled by Bloomberg. Meanwhile, Nifty and Sensex are down 0.9 per cent and 0.85 per cent, respectively. 

What's driving demand for safe haven assets

The US and Israel fired missiles across Iran on Saturday, with the Supreme Leader Ayatollah Ali Khamenei being killed. Iran responded with strikes against Israel, as well as US bases and other targets in states including Saudi Arabia, Qatar, the United Arab Emirates (UAE), Kuwait and Bahrain. 

US President Donald Trump said the forces sank nine Iranian naval ships and that combat operations would continue until all objectives were completed. Meanwhile, crude oil surged by the most in four years, with the Brent up as much as 13 per cent above $82 a barrel, according to Bloomberg.  

As global equities and risk assets come under pressure, capital tends to shift into precious metals, which act as a hedge against uncertainty, analysts said. Earlier moves have already pushed gold and silver prices higher in recent sessions, and this momentum could continue if the conflict intensifies further, Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities, said.  

Energy markets are also responding, with crude oil prices rising on fears of supply disruption through key routes like the Strait of Hormuz, which further adds to risk-off sentiment and supports bullion interest, Trivedi said. "However, the impact may not be uniform, if over the weekend there are diplomatic developments or indications of de-escalation, precious metals could see profit-taking after an initial spike of 3-6 per cent." 

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