Key Takeaways:
- Gold fell 6.7 percent on the MCX over five sessions to near Rs 1,55,000
- Silver dropped 5.2 percent to around Rs 2,42,000 as rate-hike bets strengthened
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Gold, silver fall up to 7% as Fed rate-hike bets revive
Gold fell 6.7 percent and silver 5.2 percent on the MCX over five sessions as US rate-hike bets strengthened the dollar.
Fed Chair Kevin Warsh's hawkish speech revived expectations of a September rate increase, with markets pricing a 59.9 percent chance of a hike, according to CME FedWatch data.
Gold dropped from a high of Rs 1,64,773 on Aug 24 to a low of Rs 1,53,640, while silver fell from Rs 2,48,800 to Rs 2,35,844. Brent crude rose 8.3 percent to USD 90.98 a barrel over the same stretch, stoking inflation concerns and reducing hopes for monetary easing.
Higher bond yields and a firmer dollar make non-yielding metals less attractive to investors. The next US inflation print and the Fed's September meeting will determine whether the correction extends.
Rising oil prices feed inflation risk
US-Iran tensions pushed Brent crude up 8.3 percent to USD 90.98 a barrel from a low of USD 84.56 over five sessions. Higher energy costs raise the risk that inflation stays elevated, reducing the case for monetary easing and pressuring gold and silver, which pay no income. The metals have historically traded inversely to real yields and the greenback, so any shift in Fed policy expectations moves prices sharply. With crude above USD 90, the inflation pass-through to consumer prices becomes a key input for the Fed's September decision.
Bond yields and dollar add pressure
Government bonds become more appealing when yields rise, drawing demand away from precious metals. A stronger US dollar also makes gold and silver, priced in dollars, more expensive for foreign buyers. On the international market, silver (XAG/USD) fell toward $66.00 an ounce after Warsh's remarks, according to FXStreet, while COMEX gold dropped 4 percent on the same speech. Both metals have given back a chunk of their 2026 gains as the dollar index climbed.
Gold at roughly Rs 1,55,000 on the MCX sits about 6.7 percent below its Aug 24 high, while silver trades about 5.2 percent off its peak. The moves track a broader pullback in precious metals, with the dollar index and US Treasury yields both climbing as rate-hike odds rose. Silver's steeper volatility relative to gold reflects its higher industrial demand sensitivity and thinner liquidity.
The correction shows how sensitive precious metals remain to US monetary policy. If the Fed delivers a hike in September, renewed selling could push gold and silver toward their recent lows; a dovish surprise would likely accelerate a rebound. Traders will watch the next US inflation print for direction, with the Fed's September meeting the next major event for the metals complex.
This article is for informational purposes only and does not constitute investment advice.
[1] Silver rebounds, but Fed rate-hike threat hangs over the metal[2] Gold And Silver Prices Fall Up to 7%: 5 Key Reasons Behind the Sharp Correction[3] Silver Prices Today, Live Spot Prices & Historical Charts[4] Silver Price Forecast: XAG/USD falls to near $66.00 amid Fed Chair Warsh’s hawkish tone[5] Gold drops 4% as Fed Chair Warsh's hawkish speech revives rate-hike bets
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