# Gold Tumbles Rs 1,300 and Silver Plunges Rs 2,000 Following US Fed Interest Rate Hike

> Bullion prices tumbled sharply on the commodity exchange after the Kevin Warsh-led FOMC delivered a 25 basis point rate increase, its first policy hike in three years.

**Type:** article · **Category:** Market · **Published:** 2026-09-19 · **Source:** TrendKia
**Canonical:** https://trendkia.com/en/market/us-federal-reserve-ke-byaja-daren-barhane-ke-bada-gold-1-300-rupaye-aura-silver-2-000-rupaye-lurhaki-33739 · **Language:** English
**Tags:** Gold, Silver, MCX, Federal Reserve, Kevin Warsh, Crude Oil, Interest Rates

Precious metals witnessed intense selling pressure on Thursday following the US central bank's move to tighten monetary policy. Domestic bullion prices reacted sharply to the international cues, dragging benchmark contracts lower on the Multi Commodity Exchange. Gold plunged by over Rs 1,300, while silver shed nearly Rs 2,000 as market participants adjusted their positions in response to climbing benchmark interest rates and persistent volatility across the broader energy complex.

## Precious Metals Slump on the Multi Commodity Exchange
Bullion led the decliners during Thursday's trading session on the MCX. The price of gold dropped by more than Rs 1,300 to trade near Rs 1,51,150 per 10 grams, recovering only marginally after touching an intraday low of Rs 1,50,483 per 10 grams. Industrial silver mirrored the decline with even steeper percentage losses. Silver tumbled by nearly Rs 2,000 to hover around Rs 2,32,846 per 1 kilogram, having slumped to an intraday trough of Rs 2,30,221 per 1 kilogram.

Trading across non-precious commodities showed a starkly divided picture. Lead experienced volatile price swings, while crude oil staged a modest recovery from its steep drop in the previous session. Base metals and fuels traded higher, with copper, zinc, and natural gas leading the gainers on the commodity exchange floor.

## Federal Reserve Delivers First Rate Hike in Three Years
The immediate trigger for the market downturn was the Federal Open Market Committee's unanimous 12-0 decision to increase the federal funds rate by 25 basis points to a target range of 3.75% to 4%. This decision represents the Federal Reserve's first interest rate hike in three years. Central bank officials also indicated that another rate hike could occur before the close of 2026 as monetary authorities combat persistent inflation worsened by recent spikes in global crude oil prices.

Kevin Warsh, who led the FOMC meeting, emphasized the central bank's commitment to controlling consumer price pressures. Warsh said, "The plain fact is that inflation is too high and has been for too long." Warsh reaffirmed that the committee's immediate focus remains firmly anchored on the price stability pillar of its dual mandate. The monetary tightening decision, however, drew criticism from the White House.

## Analyst Insights on Policy Moves and Treasury Yield Pressures
Evaluating the macroeconomic environment, Nachiketa Sawrikar, Fund Manager at Artha Bharat Global Multiplier Fund, observed that financial markets had largely priced in the 25 basis point adjustment. Sawrikar noted that with headline inflation remaining well above the Fed's 2% objective alongside durable economic expansion and a resilient employment backdrop, policymakers had to assert their resolve to bring price growth back under control.

Sawrikar highlighted that the critical challenge for financial markets now centers on the trajectory of long-term borrowing costs. The 10-year Treasury yield has climbed roughly 100 basis points from its February lows, including a 50 basis point surge since July. While acknowledging that higher inflation warranted a yield increase, Sawrikar argued that much of the recent yield spike might have been prevented had the central bank initiated short-term rate hikes earlier in June or July.

## International Bullion Prices and Spot Movements
In global trading, spot gold and spot silver had initially jumped by approximately 1% in early Thursday hours, briefly trading near $4,300 and $64 per ounce, respectively. However, gold surrendered those early advances to trade below the $4,300 threshold once investors digested the reality of higher borrowing costs and the potential for further tightening before year-end.

Spot silver also held gains close to 1% before settling slightly below $64 per ounce. The precious metals complex managed to find an underlying floor as energy markets stabilized, easing worries regarding immediate crude oil disruptions in the Middle East and providing breathing room for asset valuations.

## Crude Oil Dynamics and Middle East Supply Updates
Energy benchmarks maintained elevated price levels despite modest pullbacks. US WTI crude and Brent crude softened slightly but continued to trade strongly around $102 and $106 per barrel, respectively. These persistent energy price levels have kept inflation concerns elevated across central banks.

Supply constraints in the Middle East showed tentative signs of improvement. Saudi Arabia announced plans to restore approximately half of its East-West pipeline capacity within days, targeting full operational status within six weeks. Adding to signs of maritime stability, US Energy Secretary Chris Wright confirmed that 18 million barrels of crude and petroleum products moved through the Strait of Hormuz earlier this week, reducing immediate transit alarm across global shipping corridors.

## What this means for you
The Federal Reserve's rate hike has triggered a sharp retreat in bullion rates, offering immediate relief to jewelry buyers while tightening financial conditions for market investors.

- **For retail jewelry buyers:** Gold and silver have become noticeably cheaper following the domestic price drop. A decline of over Rs 1,300 per 10 grams in gold and nearly Rs 2,000 per kilogram in silver directly lowers the upfront cost for wedding and festival purchases.
- **For commodity traders:** Bullion futures on the MCX face downside headwinds in an environment of rising interest rates. With gold struggling near Rs 1,51,150 per 10 grams, leveraged positions require tighter risk management amid potential further corrections.
- **For bond and credit markets:** Sustained global policy tightening keeps upward pressure on benchmark yields. Higher interest rates across major central banks increase the cost of dollar-denominated borrowing and institutional capital.
- **For consumer inflation:** Crude oil trading stubbornly around $102 to $106 per barrel maintains underlying price pressures across supply chains. Elevated energy costs will continue to influence domestic fuel prices and transportation expenses.

## Why this happened
Bullion dropped sharply as the US Federal Reserve raised interest rates by 25 basis points, making non-yielding assets like gold and silver less attractive to institutional investors.

- **Persistent inflation pressures:** The Federal Reserve acted because consumer prices have remained far above its 2% target for an extended period. FOMC Chairman Kevin Warsh stated that achieving price stability is the central bank's primary mandate.
- **Surging energy prices:** A recent spike in global crude oil, holding WTI and Brent well above $100 per barrel, exacerbated inflationary forces. This energy surge compelled monetary policymakers to resume interest rate increases.
- **Easing Middle East supply risks:** Progress on Saudi Arabia's East-West pipeline restoration and the safe passage of 18 million barrels through the Strait of Hormuz softened immediate supply disruption fears. Reduced panic in oil markets cooled safe-haven demand for bullion.

## Questions & Answers

### 1. How much did gold and silver prices fall on the MCX today?
Gold dropped by over Rs 1,300 to around Rs 1,51,150 per 10 grams, while silver slumped nearly Rs 2,000 to trade near Rs 2,32,846 per kilogram.

### 2. What interest rate decision did the US Federal Reserve announce?
The FOMC unanimously raised the federal funds rate by 25 basis points to a target range of 3.75% to 4%, marking the first hike in three years.

### 3. Did the central bank indicate further rate increases in 2026?
Yes, the Federal Reserve signaled that an additional rate hike remains on the table before the end of 2026 to tackle elevated inflation.

### 4. Where are global crude oil benchmarks currently trading?
US WTI crude is trading around $102 per barrel, while Brent crude is positioned near $106 per barrel.

### 5. What is the status of Saudi Arabia's East-West pipeline?
Saudi Arabia aims to bring about half of the East-West pipeline's capacity back online within days and achieve full operation within six weeks.

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