Nippon India ETF Gold BeES, one of the largest gold ETFs, was trading around 2.6% lower during the session. Other major gold ETFs, including ICICI Prudential Gold ETF, SBI Gold ETF and HDFC Gold ETF, were also down around 2.6-2.7%.
Silver ETFs saw a sharper decline. Nippon India Silver ETF, or Silver BeES, was down around 3% during Monday’s (August 31’s) trade.
The fall in ETFs comes as gold and silver prices declined on the MCX.
Gold futures for October delivery fell ₹2,045, or 1.31%, to ₹1.54 lakh per 10 grams, while silver futures for December delivery declined ₹1,955, or 0.81%, to ₹2.40 lakh per kg.
Why are gold and silver ETFs falling?
The correction in precious metal ETFs is closely linked to the fall in the underlying bullion prices. Gold and silver ETFs are designed to track the prices of the respective metals, although their market prices can also move based on demand and supply for the ETF units.
Global cues have also turned weaker for precious metals. Expectations of a September US Federal Reserve rate hike have risen following hawkish comments from Fed Chair Kevin Warsh at Jackson Hole.
Higher US yields and a stronger dollar tend to put pressure on non-yielding assets such as gold and silver. For gold in particular, interest rates matter because they influence the opportunity cost of holding an asset that does not generate interest income.
Gaurav Garg, head of research at Lemonn, said the hawkish Jackson Hole comments have increased expectations of a September rate hike, with markets pricing in a significantly higher probability of a rate increase. Higher US yields and a firmer dollar could keep near-term pressure on gold and silver, he said.
Rising crude oil prices have added another source of uncertainty, with WTI crude moving above $85 a barrel amid concerns around US-Iran tensions and risks to supplies through the Strait of Hormuz. Higher oil prices could add to inflationary pressures and potentially influence the pace of monetary easing.
Gold ETFs vs silver ETFs
Silver ETFs are seeing a relatively sharper decline than gold ETFs on Monday, in line with the broader weakness in silver prices.
The move also highlights the higher volatility typically associated with silver compared with gold. Investors therefore need to distinguish between a fall in an ETF’s market price and a change in the underlying value of the metal it tracks.
Gold ETFs are exchange-traded instruments backed by physical gold and offer investors an exchange-based way to gain exposure to the metal without holding it physically.
What is supporting gold in the longer term?
The latest correction comes against a backdrop of strong investment and central-bank demand for gold.
Chintan Haria, principal, investment strategy at ICICI Prudential, said investment demand has become a key source of growth in gold demand in 2026. He also pointed to continued purchases by central banks, which bought 345 tonnes of gold in the first half of 2026, according to World Gold Council data cited by him.
Haria said central-bank diversification and geopolitical and macroeconomic uncertainty could continue to support gold demand. However, he noted that the strength of investment flows would also depend on yields, the US dollar and investor positioning.
In the near term, higher yields and a more hawkish US Federal Reserve could remain a headwind for gold. At the same time, persistent geopolitical risks and continued central-bank demand could provide structural support.
