The rally in gold and silver came to a halt on Thursday, 18 June, as signals from US Federal Reserve officials pointing to a potential interest-rate hike later this year outweighed support from falling oil prices, which had eased inflation concerns.
Comex gold futures fell $140 per troy ounce to an intraday low of $4,241. If prices closed lower, as appears likely, gold will snap its four-session winning streak. Silver futures also tumbled nearly $5 per troy ounce, slipping below the $70 mark to around $66 and heading for their first decline in three sessions.
The US Federal Reserve on Wednesday left the federal funds rate unchanged at 3.50%-3.75% for a fourth consecutive meeting, as policymakers opted to wait for greater clarity on inflation and economic growth before adjusting the monetary policy path.
However, expectations of a potential rate hike later this year strengthened after nearly half of Fed policymakers projected higher rates, reflecting concerns that inflation could remain elevated amid higher energy prices following the Iran conflict.
The three-month conflict in West Asia has disrupted the global economy, as the closure of the Strait of Hormuz severely restricted energy flows to Asian economies, keeping crude oil prices elevated and increasing the cost of living across major economies.
Several central banks have revised their inflation forecasts higher for 2026. The Federal Reserve now expects its preferred inflation gauge, the Personal Consumption Expenditures (PCE) index, to rise 3.6% this year, up sharply from its previous projection of 2.7%.
Higher interest rates tend to reduce the appeal of gold, as the precious metal does not offer any yield. In addition, expectations of tighter monetary policy typically strengthen the US dollar, making dollar-denominated commodities such as gold and silver more expensive for holders of other currencies.
Markets now see a 78% probability of a rate hike in December, up from 61% before the Fed’s policy announcement, according to the CME FedWatch Tool.
Meanwhile, geopolitical tensions in the Middle East, which have kept precious metals on a roller-coaster ride since February, appear to be moving towards a possible near-term peace agreement. US President Donald Trump reportedly signed an interim agreement with Iran at the Palace of Versailles near Paris.
However, Trump said the agreement reached this week was not final and warned that he could resume military action if negotiations fail to progress to his satisfaction.
Gold wipes out four-day gains, silver slips below ₹2.40 lakh
Tracking weakness in the international market, the near-month gold futures contract on MCX fell ₹4,600 per 10 grams to ₹1,49,188. If the decline sustains through the close, it would erase the yellow metal’s gains accumulated over the previous four sessions.
Silver futures, which are typically more volatile than gold, plunged nearly ₹14,000 per kg, slipping below the ₹2.40 lakh mark to ₹2,37,212. If losses persist, the metal is set for its sharpest single-day decline in several weeks.
Disclaimer: We advise investors to check with certified experts before making any investment decisions.
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