Hindustan Zinc shares fall 2% as silver prices drop, precious metal ETFs down up to 3%

Hindustan Zinc share price

• Hindustan Zinc shares dip 2% due to falling silver prices
• Gold and silver ETFs also declined over 1 percent each
• Easing geopolitical tensions dampened demand for precious metals

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The shares of Hindustan Zinc declined nearly 2 percent on February 17 as silver prices dropped. Gold prices also fell, pushing the precious metal ETFs down in trade.

The shares of the Vedanta Group-company dropped to Rs 583.55 apiece in the morning trading hours of Tuesday. Hindustan Zinc is the largest producer of silver in India, and produces refined silver with a minimum 99.9 percent purity. Hence, the fall in the precious metals pushed the stock down.

Gold and silver prices fall:

Silver futures with March expiry on the Multi Commodity Exchange of India (MCX) fell nearly 2 percent to Rs 2,35,142 per kilogram. The contracts with May expiry also fell around 2 percent.

Gold futures with April expiry meanwhile fell around 1 percent to Rs 1,53,522 per 10 grams. The contracts with June expiry also declined around 1 percent.

Gold and silver ETFs fall:

Edelweiss Silver ETF was the top loser among its peers, falling around 2 percent, as seen at 10.20 am. ICICI Prudential Silver ETF, Bandhan Silver ETF, Motilal Oswal Silver ETF, HDFC Silver ETF, UTI Silver ETF, DSP Silver ETF, Nippon India Silver ETF (Silverbees), Zerodha Silver ETF and several others fell more than 1 percent each.

Among the gold ETFs, Barodha BNP Paribas Gold ETF dropped more than 3.5 percent, while Invesco India Gold ETF and Birla Sun Life Gold ETF fell around 2 percent each. Bandhan Bank Gold ETF, ICICI Prudential Gold ETF, Edelweiss Gold ETF, DSP Gold ETF, SBI Gold ETF, Groww Gold ETF, Mirae Asset Gold ETF and several others meanwhile fell over 1 percent each.

Why are gold and silver prices falling today?

The fall in gold and silver prices may have been driven by easing geopolitical tensions, which in turn may have dampened the sentiment for safe-haven assets like the precious metals. US President Donald Trump said yesterday that he would be involved "indirectly" in talks between Iran and the US over the former’s nuclear programme on Tuesday in Geneva, adding he believed Tehran wanted to make a deal.

On the other hand, representatives of Ukraine and Russia will meet in Geneva for a fresh round of US-mediated peace talks.

Gautam Shah, Founder of Goldilocks Global Research, told CNBC-TV18 that he sees major opportunity in global equities, but doesn’t expect any such thing in gold and silver. He expects the precious metals to get into volatile consolidation after the massive rally earlier this year.

“A combination of falling real interest rates, a weaker USD, and a clear shift toward monetary easing by major central banks could still see upward movement on silver prices. Industrial demand from solar, electronics, and electrification will also play a key element, but this is currently steady rather than explosive, and current inventories and recycling flows can cap price spikes,” said Ross Maxwell, Global Strategy Operations Lead, VT Markets.

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