As gold and silver prices hit all-time highs, the gold and silver markets in India and elsewhere were humming with activity. Tata MF briefly halted inflows into its silver ETF fund of fund (FoF) as market tremors are being felt, particularly because of the white metal's paucity of supply. Additionally, outside of India, Bank of America increased its target price for gold to $5,000/ounce, which is almost 25% higher than current prices, and silver to $65/oz, which is 30% higher.
The silver market is experiencing a global supply shortage at a time when demand for the metal, which is utilized in sectors like solar and electric vehicles, is increasing. Demand for gold and silver is also rising as a result of US rate cuts that are devaluing the dollar relative to other major currencies.
Given that these two precious metals are valued in dollars on global markets, a decline in the value of the dollar would result in a decrease in their prices and an increase in demand. On the domestic market, gold prices were trading near Rs 1.3 lakh/10gm, while silver prices were hovering around Rs 1.8 lakh/kg, a new all-time high. Silver futures for December delivery were trading at a level near Rs 1.55 lakh late Monday, while gold futures prices for December delivery were at Rs 1.25 lakh on the MCX.
With effect from October 14, Tata MF banned purchases, switch-ins, new SIPs, and other activities into their Silver ETF FoF during the day. The fourth fund to take this action to safeguard investors' interests is Tata MF. Kotak MF was the first to make this choice for their silver ETF FoF, followed by SBIMF and UTIMF.
