Silver ETFs Sink Up To 8%, Hindustan Zinc Falls As Inflation Fears Trigger Selloff

Shares of silver exchange traded funds (ETFs) and metal-linked stocks came under heavy selling pressure on Friday as a surge in US inflation and rising bond yields sparked concerns over prolonged higher interest rates, triggering a sharp correction in precious metals.

Silver ETFs declined over 7%, while shares of Hindustan Zinc dropped nearly 5% as investors booked profits after a strong rally in the white metal earlier this week.

Among ETFs, Tata Silver ETF, Nippon India Silver ETF and HDFC Silver ETF declined between 6% and 8%.

The correction followed a sharp fall in global silver prices. Spot silver dropped 5.9% to $78.53 per ounce, while the most active July silver contract on the MCX fell 5.4% to ₹2,75,100 per kilogram. COMEX silver futures for the same month were down 7.6% at $78.81 per ounce.

Inflation Concerns Trigger Precious Metal Selloff

Precious metals witnessed broad-based weakness after fresh US inflation data strengthened expectations that interest rates may remain elevated for longer.

US wholesale inflation accelerated to its fastest pace since 2022, while consumer inflation rose at its quickest pace since 2023. The inflation surprise pushed Treasury yields sharply higher and strengthened the US dollar.

The two-year Treasury yield climbed to its highest level in 14 months, while the dollar index gained 0.3%. Higher bond yields and a stronger dollar typically hurt demand for precious metals because assets such as gold and silver do not generate interest income.

Gold also extended losses for a fourth consecutive session and slipped to a one-week low. Spot gold fell 1.5% to $4,579.19 an ounce, while US gold futures for June delivery dropped 2.2% to $4,582.60. Bullion has declined nearly 3% this week.

Profit Booking Adds To Pressure

Analysts said silver's recent rally had become increasingly speculative, making the metal vulnerable to sharp corrections.

Silver had surged earlier this week and at one point approached the $90-per-ounce mark amid strong momentum in industrial metals and broader commodity buying.

The rally had also been supported by a falling gold-silver ratio, which some traders viewed as an indication that silver remained relatively inexpensive compared with gold.

However, Friday's decline reflected aggressive profit booking as investors locked in gains following the rapid rise.

Oil Shock Continues

Geopolitical tensions continued to remain a major factor influencing markets. The Strait of Hormuz — one of the world's most important energy shipping routes — remains heavily disrupted amid the continuing Iran conflict and uncertainty around peace efforts. The route handles a significant portion of global oil and gas flows.

According to reports, tanker movement through the passage has slowed sharply, keeping global crude prices elevated. Brent and WTI crude continued to trade above the $100-per-barrel mark, increasing concerns around inflation and global economic stability.

Escalating tensions around US-Iran negotiations have further complicated the outlook. During discussions in Beijing, US President Donald Trump and Chinese President Xi Jinping reportedly discussed the strategic importance of keeping the Strait of Hormuz operational.

Meanwhile, New York Federal Reserve President John Williams indicated that policymakers currently see no urgent need to alter interest rate policy despite geopolitical uncertainty.