Gold Plunges Rs 4,300 in 2 Days as Fed Rate Hike Fears Mount

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Precious metals have extended losses on domestic and international exchanges, driven by surging crude oil prices and growing expectations of further interest rate hikes by the U.S. Federal Reserve. Domestic gold prices dropped by Rs 4,300 per 10 grams over two consecutive trading sessions, while silver prices tumbled nearly Rs 9,000 per kilogram on the Multi Commodity Exchange (MCX).

Domestic Futures & International Spot Prices

On the MCX, gold futures for October 2026 delivery fell by Rs 235 to settle at Rs 1,46,569 per 10 grams, closing below the key level of Rs 1,47,700. Similarly, MCX silver futures for September 2026 delivery dropped by Rs 1,542 to Rs 2,25,900 per kg, ending below Rs 2,28,000.

In global markets, spot gold hovered around $4,124.57 per ounce, having touched its lowest level since August 5 in previous trading. U.S. gold futures fell 0.3% to $4,156.70 per ounce. Other precious metals also moved lower:

• Spot Silver: Declined 0.6% to $60.62 per ounce.

• Platinum: Fell 1% to $1,699.86 per ounce.

• Palladium: Slipped 0.5% to $1,209.08 per ounce.

Macroeconomic Factors: Crude Oil & Fed Rate Expectations

The primary catalyst behind the pullback is the surge in crude oil prices sparked by Middle East conflict risks and potential supply disruptions. Higher oil prices increase operational costs across the economy, creating inflationary pressures that encourage central banks to maintain elevated interest rates. Because non-yielding assets like gold carry higher opportunity costs during high-rate regimes, investors tend to pivot toward interest-bearing assets.

According to the CME FedWatch Tool, traders now price in a 70.3% probability of a Federal Reserve rate hike in October. Federal Reserve Governor Lisa Cook noted that persistent inflation is being propelled by artificial intelligence infrastructure demand alongside energy prices, though she stopped short of confirming explicit rate increases. Meanwhile, market participants are closely monitoring diplomatic efforts as U.S. and Iranian officials hold separate discussions with mediators to negotiate an end to the seven-month war.

Physical Gold Market Rates Across Major Indian Cities

• Delhi: Standard 22-carat gold is priced at Rs 1,10,232 per 8 grams, while pure 24-carat gold stands at Rs 1,20,248 per 8 grams.

• Mumbai, Chennai & Hyderabad: Standard 22-carat gold is priced at Rs 1,10,112 per 8 grams, while pure 24-carat gold trades at Rs 1,20,128 per 8 grams.

Expert Strategy: Buy, Sell, or Hold?

Market analyst Manoj Kumar Jain of Prithvi Finmart observed that gold and silver have breached critical technical support levels and remain under near-term pressure.

Jain projects potential short-term downside targets:

• MCX Gold: Could test Rs 1,44,000–Rs 1,41,400 per 10 grams (4,110 - 4,040 per troy ounce internationally).
• MCX Silver: May decline toward Rs 2,24,000–Rs 2,20,000 per kg (60- 59.10 per troy ounce).

Key Recommendations for Investors:

1. Short-Term Traders: Avoid fresh long positions until clear outcomes emerge from the ongoing U.S.-Iran peace negotiations. Breakthroughs in peace talks could help stabilize prices, while an absence of resolution will likely prolong market pressure.

2. Long-Term Investors: Strategic, long-term buyers can view the current price drop as an opportunity to accumulate gold gradually using a Systematic Investment Plan (SIP) approach.