Following the outbreak of conflict in the Middle East, there has been a noticeable rise in gold and silver prices. Gold prices have increased by approximately 4% while silver prices have gone up by over 7%. However, this surge in physical metal prices contrasts sharply with the performance of Gold and Silver ETFs, which have witnessed declines of 3-4% and over 7%, respectively. This discrepancy raises questions among experts who had anticipated that geopolitical tensions would drive up ETF investments rather than cause declines.

The recent drop in Gold and Silver ETFs is primarily attributed to a decrease in the global bullion market, which occurred during a time when the Indian bullion market was closed. Reports indicated that on March 3rd, the price of gold had fallen by over 4% in the global market. Despite the rising spot prices for gold and silver on the Multi Commodity Exchange (MCX) on Holi, where gold rose to ₹163,511 per 10 grams and silver rose to ₹272,400 per kilogram, the ETFs failed to keep pace with these increases.

This situation highlights a significant disconnect between physical and paper markets and raises concerns over the stability and investor confidence currently associated with Gold and Silver ETFs. Market analysts will be closely monitoring these trends as they could impact investment strategies going forward, particularly in the context of ongoing geopolitical tensions that typically drive safe-haven demand.