Gold and Silver ETFs Slide as Inflation Fears Override Safe-Haven Demand

Safe Havens Lose Their Shine

Gold and silver entered the third week of March under heavy pressure, extending one of the sharpest corrections in years despite an intensifying geopolitical backdrop that would traditionally support precious metals.

Instead of attracting defensive inflows, both metals declined sharply as markets reassessed the macroeconomic consequences of the Iran war. Oil prices above $100 per barrel have reignited global inflation concerns, forcing investors to rethink expectations for monetary easing across major economies.

Silver dropped toward $64 per ounce on Monday, extending a four-week selloff that has erased more than 15% of its value since the conflict escalated. Gold followed a similar trajectory, falling roughly 3% on the day to around $4,350 per ounce and marking its ninth consecutive session of losses — its longest decline since early 2026 began.

Inflation, Not Fear, Is Driving Markets

The paradox reflects a changing macro environment. While geopolitical risk typically boosts precious metals, the current shock is inflationary rather than deflationary. Rising energy costs are strengthening expectations that central banks may need to keep policy restrictive for longer, or even tighten further.

Markets are increasingly pricing the possibility of a Federal Reserve rate hike later this year, while the European Central Bank, Bank of England and Bank of Japan have all signaled readiness to respond if inflation pressures intensify. Higher yields reduce the relative attractiveness of non-income-generating assets such as gold and silver, encouraging capital rotation into bonds, the US dollar and energy-linked exposures.

Additional pressure has emerged from sovereign activity. Reports that several Arab Gulf states may be selling gold reserves to finance economic stabilization efforts have added supply to an already fragile market. The regional economic outlook has deteriorated rapidly, with some Gulf economies facing potential GDP contractions comparable to the early-1990s Gulf War scenario should disruptions to the Strait of Hormuz persist.

Taken together, the environment has transformed precious metals from crisis hedges into rate-sensitive assets. Investors who accumulated positions during the multi-month rally, when gold traded above $5,500 and silver briefly surged past $120, are now taking profits as macro conditions shift.

ETF Outflows Accelerate Across Precious Metals

ETF flows highlight how quickly sentiment has reversed.

Gold ETFs, managing roughly $157.6 billion globally, declined 10.35% over the past week while recording nearly $583 million in weekly outflows. The largest vehicles absorbed much of the selling pressure. The iShares Physical Gold ETC (IGLN), the sector’s biggest product with over $32 billion in assets, fell 10.77% during the week even as it maintained positive year-to-date flows. The Invesco Physical Gold ETC (SGLD) and Xetra-Gold ETC (4GLD) posted similar declines near 10%, reflecting broad-based exposure reductions rather than fund-specific moves.

Silver ETFs experienced an even sharper adjustment. With total assets of $18.6 billion, the segment dropped 13.15% week-over-week. The iShares Physical Silver ETC (ISLN) and WisdomTree Physical Silver ETC (PHAG) each declined roughly 14.7%, illustrating silver’s higher volatility and stronger sensitivity to shifting growth expectations. Mining equity exposure amplified the selloff further, with the Global X Silver Miners UCITS ETF (SILV) falling more than 16% as equity investors priced weaker industrial demand alongside tighter financial conditions.

Despite modest inflows into select silver products, year-to-date flows across the segment remain deeply negative, suggesting investors are reducing strategic allocations rather than simply rotating within the category.

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Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.