Precious metals experienced a sharp downturn across domestic and global commodity markets as traders prepared for the release of critical US Consumer Price Index figures. Both gold and silver saw significant declines as broader financial markets recalibrated expectations ahead of next week's monetary policy decisions by the US Federal Reserve. Rising Treasury yields and elevated energy costs have dampened the appeal of non-yielding assets.
Domestic Futures Market: MCX Gold and Silver Under Pressure
Trading on the Multi Commodity Exchange reflected deep losses for both major precious metals during Friday's session. MCX gold plunged to trade around Rs 1,51,800 per 10 grams. In early trading hours, the yellow metal had hit an intraday trough of Rs 1,50,695 per 10 grams, down notably from the preceding session's close of Rs 1,52,341 per 10 grams, translating into a decline of over Rs 1,000.
Silver mirrored the weakness with an even sharper plunge. On the MCX, silver crashed by more than Rs 2,100, reaching an intraday low of Rs 2,30,270 per kilogram. It later staged a slight recovery to hover above the Rs 2.32 lakh per kilogram mark, tracking broad selling in international markets.
Global Spot Rates and Weekly Performance
In international trade, spot gold traded marginally higher on the day but remained firmly beneath the $4,400 per ounce threshold, struggling around $4,330 per ounce. This followed a steep 2 percent drop in the prior session. The metal is currently poised to end the week lower by more than 2 percent, putting it on course for a third consecutive weekly retreat.
Spot silver experienced even deeper losses, trading near $63.5 per ounce after tumbling over 5 percent in the prior trading session. The breakdown below $64 per ounce highlights waning investor appetite for bullion ahead of crucial economic indicators from the United States.
Rate Hike Odds Rise on Accelerating US Producer Prices
The primary catalyst behind the sell-off in precious metals is the anticipation surrounding US inflation readings. August data showed US producer prices accelerated, driven higher by wholesale energy costs amid the conflict involving Iran. Consequently, financial markets are now pricing in approximately a 71 percent probability that the Federal Reserve will raise interest rates by 25 basis points at its upcoming policy meeting, compared to a 61 percent probability estimated prior to the PPI release.
Compounding the pressure, US Treasury yields climbed sharply following lower-than-expected bond purchases by the US Treasury Department during its initial expanded buyback operation. Because gold and silver generate no yield or interest, climbing bond yields elevate the opportunity cost of holding bullion, prompting portfolio reallocations away from precious metals.
Crude Oil Dynamics and Broader Commodity Performance
Surging crude oil prices driven by escalating tensions between the US and Iran have further intensified inflation anxieties. While crude prices saw a slight technical correction following a robust rally, they remain firmly elevated. US WTI crude held above $102 per barrel, and global benchmark Brent crude traded near $108 per barrel, while gasoline and natural gas prices also saw price adjustments.
Across the broader commodity spectrum, gold, silver, and lead stood out among the worst performers on the MCX. In contrast, base metals including zinc and copper recorded robust gains, demonstrating clear divergence in industrial versus precious commodity demand ahead of the decisive CPI inflation print.
