Precious metals experienced renewed downward momentum in international markets, pulling spot gold and silver prices close to their two-month lows. The slide comes as a sharply stronger US currency and escalating government bond yields diminish the investment appeal of non-yielding assets. At the same time, the Reserve Bank of India (RBI) enters its October 2026 monetary policy review facing a complicated macroeconomic landscape, with market participants closely tracking whether the central bank will hike rates or maintain a status quo.
Precious Metals Retreat on Strong Dollar and Elevated Yields
In global spot trading, gold weakened to slip below $4,150 per ounce, nearing its lowest price mark in roughly two months. Spot silver faced similar selling momentum, tumbling below the threshold of $61 per ounce. Investors moved away from precious bullion as alternative returns on cash and government debt climbed. The US dollar advanced to its highest level since April 2025. Concurrently, US 10-year and 30-year treasury yields reached their highest points in 24 months, reflecting intensified fiscal strain and lingering inflation worries across financial markets.
Reserve Bank of India Evaluates Rate Decision Amid Macro Pressures
On the domestic economic front, the Reserve Bank of India faces a delicate balancing act ahead of its October 2026 policy statement. Policymakers are navigating an arduous macro environment marked by elevated crude oil prices and spiking treasury yields. Deciding between implementing a fresh rate hike or holding rates unchanged carries significant ramifications across the financial system, directly influencing retail savings, household borrowing expenses, and overarching inflation trajectories. Prevailing market expectations anticipate the RBI mirroring the US Federal Reserve by rolling out a 25 basis point rate increase.
US Service Sector Costs and Central Bank Probabilities
Fresh data released by the Institute for Supply Management (ISM) revealed that input cost pressures within the US services sector accelerated at their sharpest pace in more than four years during the previous month. Despite these persistent price pressures, financial markets are pricing in an estimated 78% probability that the Federal Reserve will leave interest rates untouched during its upcoming session, largely influenced by softer-than-projected US employment figures.
Easing Crude Oil Prices Temper Inflation Concerns
Providing a modest counterweight to broader economic stresses, crude oil prices declined amid indications of expanding crude supplies originating from the Middle East. Lower energy prices helped moderate acute fears surrounding rapid inflation and further aggressive monetary tightening. Nevertheless, with benchmark US yields lingering near multi-year highs and currency strength persisting, safe-haven metals continue to navigate headwinds.
