Gold, silver ETFs rally up to 6% amid soft dollar and falling oil prices. Should investors enter?

Gold and silver exchange-traded funds (ETFs) jumped up to 6% on Thursday as prices of both precious metals opened sharply higher on the Multi Commodity Exchange (MCX). A decline in the US dollar and bond yields boosted sentiment following a major victory for Democrats in the US midterm elections.

Additionally, a sharp 10% fall in oil prices over two sessions eased concerns about further Federal Reserve rate hikes, providing further support to gold and silver prices.

There were nearly 26 gold ETFs in the said period, of which Motilal Oswal Gold ETF and Choice Gold ETF gained 4% each on Thursday. UTI Gold ETF, Invesco India Gold ETF and four other gold ETFs gained 3% each.

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Around 16 gold ETFs such as SBI Gold ETF, Nippon India Gold BeES, HDFC Gold ETF went up by 2% each.

Nearly 19 silver ETFs were there in the said time period. 360 One Silver ETF jumped the most, around 6% to its day’s high of Rs 191.8 on NSE. Angel One Silver ETF and Quant Silver ETF gained 4% each whereas the other 16 silver ETFs gained between 2-3% on Thursday.

Anup Bhaiya, Founder, Money Honey Financial Services Ltd, shared with ETMutualFunds that Gold ($4,140) and silver ($53) are consolidating after the post-midterm rebound. Near-term, December Fed hike odds (75%) and sticky inflation keep upside capped, with volatility likely around jobs data.

Medium-term, central-bank demand and the eventual end of the hiking cycle support a recovery. Investors should hold core positions and accumulate on dips below $4,000 (gold) / $50 (silver), avoiding aggressive chasing until rate expectations ease, he further said.

In the domestic market, MCX silver futures for December 2026 delivery were up by Rs 3,100 to Rs 1,90,829 per kg. Gold futures for December 2026 delivery gained by Rs 2,70 to Rs 1,45,909 per 10 grams. Over two sessions, silver prices have risen Rs 11,231 per kilogram, while yellow metal is up Rs 6,400.

Crude oil prices extended their decline, while the US dollar weakened after Democrats swept the midterm elections, securing control of both the Senate and the House of Representatives. The outcome has fuelled expectations of mounting pressure on the Republican Party to end the war with Iran and negotiate a deal.

In the international market, spot gold climbed 1.9% to $4,134.83 an ounce by 0316 GMT, hitting its highest level since October 22. The yellow metal had surged around 3.4% in the previous session, marking its biggest single-day gain since August 19. Spot silver advanced 1.7% to $53.12 an ounce.

Vikram Subburaj, CEO, Giottus told ETMutualFunds that Thursday’s ETF rebound has support from lower US yields and a weaker dollar but the interest-rate outlook still gives buyers reason to hold back some money.

“Friday’s US employment report could reinforce those expectations and interrupt the recovery. Investors making fresh allocations should therefore avoid committing their entire amount before the November 6 release. A first purchase can establish exposure while leaving room to respond to the data.”

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Existing holders should use the rebound to check whether their gold and silver exposure exceeds the allocation they had intended. Investors below their chosen allocation could stagger fresh purchases and retain some money until after the November 6 US employment report. Adding simply to lower the average purchase price increases exposure without necessarily improving the investment case, he further said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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