Precious Metals Under Pressure: Bullion Sinks on Rate Hike Worries
Bullion markets faced a difficult week as gold and silver prices tumbled under the weight of global uncertainty. Investors turned cautious, and both metals posted significant losses across domestic and international markets.
Over the week, gold lost around 3.5 percent, its sharpest weekly drop since June. Silver was hit harder, shedding 7.8 percent and sliding to levels not seen since November 2025, as sellers dominated the market.
The downturn reflects a mix of pressures. Escalating tensions in West Asia, expensive crude oil, and expectations that the US Federal Reserve may hold interest rates high for a prolonged period have reduced the appeal of precious metals. Gold, which does not generate interest, typically loses favour when borrowing costs rise.
Indian markets reflected the global weakness. The December gold contract on the Multi Commodity Exchange fell to around Rs 1,42,150 per 10 grams. During trading, the metal dipped to Rs 1,42,079 per 10 grams, down roughly Rs 1,230, or 0.86 percent, from the prior session.
Silver recorded an even deeper decline. December silver futures slipped to about Rs 1,95,408 per kilogram, falling Rs 4,191, or 2.1 percent. Continued selling has kept the metal under the significant Rs 2 lakh per kilogram threshold.
On the international front, COMEX gold declined 1.24 percent to near 4,010 dollars per ounce in early Saturday trade. The metal touched a low of 3,989.10 dollars per ounce, its weakest level since July 20. COMEX silver dropped about 1.9 percent to 53.96 dollars per ounce.
Crude oil has emerged as a central concern. Houthi attacks and rising Middle East tensions lifted Brent crude toward 116.7 dollars per barrel. Analysts warn that higher energy prices could feed inflation, compelling central banks to keep rates elevated.
Although the Federal Reserve is seen as unlikely to raise rates at its late October meeting, the probability of a December hike is still above 80 percent. This expectation has encouraged investors to avoid adding new gold and silver positions.
A robust dollar and higher US Treasury bond yields have further weighed on demand. Experts say that inflation and interest rate worries are currently producing a negative mood in the bullion market.
Looking ahead, traders will watch the US Personal Consumption Expenditures data, a key inflation measure for the Federal Reserve. The European Central Bank's policy meeting, Chinese economic indicators, and global energy developments will also help determine the next move in gold and silver.
Experts suggest that persistent inflation and a firm central bank stance could keep pressure on precious metals. However, if a major geopolitical risk or economic shock emerges, gold may again attract buyers seeking safety.