Silver ETFs drop 3.2% as Fed hike bets rise
Silver exchange-traded funds fell sharply on Friday as rising expectations for a Federal Reserve rate hike pressured precious metals. The SBI Silver ETF lost 3.2 percent, marking the largest drop among the sector.
Silver ETFs post steep losses
The SBI Silver ETF closed down 3.2 percent at Rs 221.77. ICICI Prudential Silver ETF fell 3.1 percent to Rs 226.16. Nippon India Silver ETF declined 3.1 percent to Rs 216.59. Tata Silver ETF dropped 3.1 percent to Rs 21.98. These moves reflect a broad sell-off in the sector.
Global silver price extends decline
International silver prices slipped 0.3 percent to $63.40 per ounce on Friday. This follows a 5.5 percent drop in the previous session. That prior fall was the largest one-day loss since June. Spot gold remained stable around $4,312 per ounce. Gold had fallen nearly 2 percent on Thursday. The metal is tracking a third consecutive weekly loss.
Fed rate hike probability rises
US producer prices rose 0.4 percent in August. This followed an upwardly revised 0.1 percent increase in July. Traders raised the probability of a 25 basis point rate hike to 70 percent. This was up from 64 percent before the data release. Higher interest rates typically weigh on non-yielding assets like silver. The US dollar also strengthened, adding further pressure on metal prices.
Oil surge complicates inflation outlook
Brent crude jumped 6 percent to approximately $107 per barrel. Supply disruptions in the Strait of Hormuz and Red Sea drove the increase. Rising energy costs have intensified inflation concerns. Investors now expect the Federal Reserve to tighten monetary policy. Domestic silver December futures traded near Rs 2.31 lakh per kg. This represented a 1.4 percent daily decline. The weekly drop exceeded 4 percent.
