Gold, Silver Prices Fall on MCX as Crude Oil Rally Fuels US Fed Rate Hike Bets

Gold and silver prices declined in early trade on Wednesday, August 19, as elevated crude oil prices amid a stalemate in US-Iran talks fuelled expectations of a possible US Federal Reserve rate hike. A weaker dollar, however, limited the decline in gold prices.

MCX Gold October futures fell 0.13% to ₹1,54,055 per 10 grams, while MCX Silver September futures declined 1.21% to ₹2,29,600 per kg, as of around 9:35 am IST. The dollar index eased to 99.57 from 99.66 in the previous session, making dollar-priced gold marginally cheaper for overseas buyers.

In the international market, spot gold rose 0.2% to $4,342.33 an ounce in early Asian trade, recovering slightly after falling nearly 2% on Tuesday. US gold futures for December delivery declined 0.6% to $4,396.30.

Why Are Gold and Silver Prices Falling?

Brent crude traded near $92 a barrel on Wednesday, extending gains for a fourth consecutive session, after US President Donald Trump said on Tuesday that no negotiations were underway with Iran while maintaining that the Strait of Hormuz remained open.

The comments contrasted with Tehran's position on the strategic waterway, with Iranian officials continuing to dispute Washington's claims over its status.

Iran had also responded sharply to Trump's earlier description of the Strait of Hormuz as "New US Territory". Iranian Deputy Foreign Minister Kazem Gharibabadi criticised the remarks in a post on X.

Elevated crude oil prices have kept inflation concerns in focus and strengthened expectations that interest rates could remain higher for longer. Since gold is a non-yielding asset, higher interest rates typically weigh on its appeal, although the metal continues to be viewed as a hedge against inflation.

US Treasury yields eased from recent highs, providing some support to bullion. However, the broader global bond selloff has pushed long-term borrowing costs higher across several major economies, keeping the outlook for precious metals mixed.

Fed Meeting Minutes in Focus

Minutes from the US Federal Reserve's July policy meeting are due later on Wednesday and could provide fresh clues on the central bank's interest-rate outlook.

The Fed kept rates unchanged at its latest meeting, although three of the 12 Federal Open Market Committee members voted for a 25 basis point hike, highlighting differences among policymakers over persistent inflation.

According to the CME FedWatch Tool, markets are currently pricing in a 65% probability of the Fed holding rates steady in September, against a 35% probability of a rate hike.

The Fed's next policy meeting is scheduled for September 15-16. Investors will also track the July Personal Consumption Expenditures (PCE) price index, due on August 26, for further clues on the rate outlook. PCE inflation has remained above the Fed's 2% target since early 2021.

Gold, Silver Price: Key Levels to Watch

According to Kotak Neo Research, spot gold has support at $4,325 and $4,305 an ounce, while resistance is placed at $4,387 and $4,406 an ounce.

For spot silver, support is seen at $62.15 and $61.60 an ounce, with resistance at $63.95 and $64.50 an ounce.

On the MCX, Gold October futures have support at ₹1,53,456 and ₹1,53,017 per 10 grams, while resistance is placed at ₹1,54,876 and ₹1,55,315.

For Silver September futures, support is seen at ₹2,28,111 and ₹2,26,907 per kg, while resistance is placed at ₹2,32,007 and ₹2,33,211.

On the technical charts, Kotak Neo Research maintains a sideways bias on MCX Gold October futures within a range of ₹1,51,960-₹1,56,100, while MCX Silver September futures are also expected to trade with a sideways bias within a range of ₹2,24,950-₹2,36,093.

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