Silver exchange-traded funds (ETFs) in India fell by 4% to 5% on June 23, 2026, amid a global decline in prices. The drop was triggered by rising expectations of US Federal Reserve interest rate hikes and a strengthening US dollar, which typically make precious metals less attractive. Gold ETFs showed more resilience compared to the sharp selloff seen in silver.
What Happened
On June 23, 2026, Indian investors in silver-linked Exchange Traded Funds (ETFs) witnessed a sharp decline, with most funds dropping between 4% and 5%. The selloff in these funds reflects a broader, global trend where silver prices have slipped toward levels not seen since earlier this year. On the Multi Commodity Exchange (MCX), July 2026 silver futures also faced pressure, falling 3.18% to Rs 2,26,850 per kg, while gold futures for August 2026 delivery saw a milder dip of 1.21%.
Why Global Rates and Dollar Impact Silver
The primary driver for this correction is the expectation of further interest rate hikes by the US Federal Reserve. When the US central bank increases interest rates, the US dollar typically strengthens. Since silver is priced in dollars, a stronger dollar makes it more expensive for international buyers, which often lowers global demand. Additionally, because silver does not pay interest or dividends, rising interest rates make it less appealing to investors compared to bonds or savings accounts, which begin to offer better returns in a high-rate environment.
The Difference Between Gold and Silver
While both gold and silver are precious metals, they often react differently to market stress. Gold is primarily viewed as a safe-haven asset, meaning investors often flock to it during uncertain times. This is why gold ETFs showed relative resilience, falling roughly 1.6% to 1.7% compared to the 4% to 5% drop in silver ETFs. Silver, on the other hand, has a dual nature; it is both a precious metal and a critical industrial metal. Because of its heavy use in industries like solar panels, electronics, and automotive, silver is generally more volatile. When economic growth fears or rate hike worries increase, industrial demand is often questioned, causing silver prices to fluctuate more sharply than gold.
Risks for Investors
For investors, the recent price movement highlights the high volatility inherent in silver. Unlike blue-chip stocks, which may have earnings and dividends to support their value, commodity-based ETFs are driven largely by global market sentiment, currency fluctuations, and macro-economic policies. The risk for those holding silver ETFs is that they remain highly sensitive to US economic data. If the Fed maintains a strict stance on interest rates, or if the dollar continues to gain strength, pressure on silver prices could persist.
What Investors Should Track
Moving forward, investors may want to track a few key monitorables. First, keep an eye on US inflation and employment data, as these numbers heavily influence the Federal Reserve's decisions on interest rates. Second, monitor the US Dollar Index (DXY), as a rising dollar usually acts as a headwind for commodities. Finally, observe the industrial demand outlook, as silver’s performance is often tied to the health of global manufacturing sectors.