Silver market jitters: ETFs see steep 20% drop; what’s causing the sudden drop?

Indian silver exchange-traded funds (ETFs) experienced a dramatic sell-off on Thursday, with values plummeting by up to 20% during early trading hours. This sudden drop has sent ripples through the market, leaving analysts and investors scrambling to understand the underlying causes. The surprising decline in silver ETFs has been attributed to a combination of global economic uncertainties and a shift in investor sentiment, prompting a reevaluation of precious metal assets. Market experts suggest that a stronger U.S. dollar and rising interest rates may have contributed to the downturn. As the dollar strengthens, silver, which is priced in U.S. dollars, becomes more expensive for investors using other currencies, leading to reduced demand. Additionally, the anticipation of further interest rate hikes by central banks has led investors to seek higher-yielding assets, moving away from traditionally safe-haven investments like silver. The sell-off in Indian silver ETFs also reflects broader market trends, as geopolitical tensions and inflation concerns continue to shape investor behavior. While the sharp decline has raised alarms, some analysts believe this could present a buying opportunity for long-term investors. As market dynamics continue to evolve, stakeholders are closely monitoring developments to gauge whether this is a temporary fluctuation or indicative of a longer-term shift in the silver market.

— Authored by Next24 Live