Gold and Silver Prices Crash Amid US Fed Rate Hike Fears

Precious metal prices witnessed a significant downturn on the Multi-Commodity Exchange (MCX) this Thursday as investors reacted to signals from the US Federal Reserve. While easing oil prices provided some cushion, the looming possibility of interest rate hikes has dampened the sentiment for gold and silver.

The Fed Factor: Why Precious Metals are Retreating

The primary driver behind the sharp decline in bullion prices is the shift in US monetary policy expectations. Although the Federal Reserve opted to keep policy rates unchanged in its most recent meeting—maintaining the current 3.50%-3.75% range—the outlook has turned hawkish. According to projections released on Wednesday, nine out of the 19 US policymakers now believe a rate hike will be necessary later this year.

This shift is critical for investors because rising interest rates typically lead to higher yields on bonds, deposits, and other interest-bearing assets. As these alternative investments become more lucrative, gold—which provides no yield—becomes relatively less attractive to global investors, leading to sell-offs.

MCX Market Volatility: Silver and Gold Performance

The impact of these global signals was immediately visible in the domestic derivatives market. Silver futures for July 2026 delivery saw a steep decline of Rs 6,298, or 2.5%, dropping to Rs 2,45,509 per kg. Gold futures for August 2026 delivery also faced pressure, falling by Rs 1,600 to settle at Rs 1,52,304 per 10 grams.

Interestingly, the correction occurred despite a recent US-Iran interim agreement that eased oil prices and reduced certain inflation concerns—factors that usually support precious metals. In the international spot market, gold saw a 1.4% rise to $4,316.42 per ounce, showing a divergence between global spot prices and the more volatile futures contracts.

Technical Outlook and Trading Strategy

For investors looking to navigate this volatility, market experts suggest a cautious approach. Manoj Kumar Jain of Prithvi Finmart identified key support and resistance levels to guide trading decisions.

For gold, the immediate support levels are positioned between Rs 1,52,800 and Rs 1,52,000, while resistance stands at Rs 1,54,400–Rs 1,55,500. For silver, the support zone is seen at Rs 2,48,000–Rs 2,44,400, with resistance ranging from Rs 2,55,000 to Rs 2,58,800.

Given that recent price targets have been met, the current advice for existing holders is to consider booking profits on long positions. Rather than chasing the market during this dip, traders are advised to wait for fresh entry opportunities within the identified support ranges.

Key Takeaways