Geopolitics and Weak Dollar Boost Precious Metals ETFs

Gold and silver exchange-traded funds (ETFs) gained Tuesday, March 10, 2026, following a rally in the underlying metals. The ascent was primarily driven by a 0.3% drop in the US dollar, as speculation grew that a conflict in West Asia might stay contained. US President Donald Trump's assertion that military action against Iran was "very complete" contributed to this sentiment, easing fears of broader escalation and helping to cool oil prices. Spot gold climbed to approximately $5,161.54 per ounce, while silver reached $88.25 per ounce internationally. On the Multi-Commodity Exchange (MCX), gold April futures rose 1.06% to ₹1,62,000 per 10 gm, and silver May futures advanced 3.31% to ₹2,76,000 per kg. Several silver ETFs, including DSP Silver ETF and Axis Silver ETF, saw increases of up to 4%, with other silver and gold ETFs posting gains between 0.58% and 3.31%. This rise against a weaker dollar highlights the strong link between currency depreciation and the appeal of precious metals, which are priced in dollars.

Analysts Urge Short-Term Caution Amid Investor Optimism

Despite the immediate price surge, investor sentiment shows mixed signals. Kranthi Bathini of WealthMills Securities advised against short-term ETF purchases, suggesting potential entry points for medium-term investors who can tolerate market swings. Bathini noted that ongoing geopolitical uncertainty is expected to support gold and silver prices in the medium term. This cautious near-term view contrasts with consistent inflows into gold ETFs, which saw $5.3 billion added in February 2026, marking nine straight months of accumulation. North America and Asia led these inflows, while Europe experienced outflows tied to earlier market sell-offs. Institutional investors are continuing to increase their holdings, indicating strategic diversification rather than speculative trading. COMEX net long positions for gold exceeded 300 tonnes by February 24, 2026. J.P. Morgan Global Research forecasts gold prices to average $5,055/oz by Q4 2026, rising towards $5,400/oz by the end of 2027, driven by ongoing central bank demand and investor diversification.

Mining ETFs Show Higher Volatility Than Physical Bullion Funds

Precious metals ETFs have shown varied performance, with physical bullion-backed funds proving more stable than those focused on mining companies. Gold mining ETFs, such as VanEck Gold Miners (GDX), have been much more volatile, dropping 10.60% in the week ending March 6, 2026. This far outpaced the 2.38% decline in physical gold ETFs like SPDR Gold Shares (GLD). This higher risk in mining stocks comes from their exposure to overall stock market trends, company earnings, and operating costs, in addition to metal prices. Major gold ETFs like SPDR Gold Trust (GLD) command substantial Assets Under Management (AUM), exceeding $180 billion, with expense ratios around 0.40%, though lower-cost options like SPDR Gold MiniShares Trust (GLDM) offer 0.10%. For silver, the iShares Silver Trust (SLV) holds approximately $44.18 billion in AUM with a 0.50% expense ratio, while abrdn Physical Silver Shares ETF (SIVR) offers a lower 0.30% fee. HDFC Silver ETF FoF, an indirect route to silver exposure, manages ₹5,811.22 crore in AUM with a 0.55% expense ratio.

Market Shocks Trigger Large Gold ETF Outflows

Despite the recent rally, significant risks remain in the market. A historic $2.91 billion liquidation from the SPDR Gold Trust (GLD) occurred on March 4, 2026, the largest single-day outflow since 2016. This occurred after a sharp global equity market crash led to margin calls, forcing institutions to sell their most liquid assets, including gold ETFs. This event highlighted gold's dual role: a safe haven, but also a readily sellable asset during major market stress. The liquidity that makes ETFs appealing can also make them vulnerable during widespread market panic. Silver's role as both a monetary and industrial metal adds to its volatility. Some analysts caution about potential price bubbles and suggest waiting for prices to stabilize before investing. A divergence between physical ETF gains and falling futures prices on March 9, 2026, also indicated underlying market pressures that could signal short-term weakness.

Outlook Remains Bullish for Gold; Silver Faces Volatility

Looking ahead, gold forecasts remain largely bullish. Goldman Sachs set a 2026 target of $5,400 per ounce, and Bank of America projects $6,000 by spring 2026, citing continued central bank demand and de-dollarization efforts. Overall analyst projections for gold in 2026 range from $4,400 to over $6,300, reflecting optimism driven by ongoing inflation concerns and geopolitical events. For silver, industrial demand from green technologies supports a long-term view. However, the metal's higher volatility and sensitivity to speculative trading suggest ongoing price discovery, with key support levels expected to hold for a recovery towards ₹2,80,000–₹3,00,000. The immediate future may involve consolidation, and some analysts recommend a patient approach for new ETF investments.