Fed Rate Hike Expectations Send Gold and Silver Prices into Correction Mode

The US Federal Reserve's potential interest rate hike in mid-September may lead to a correction in gold and silver prices. According to Ajay Kedia, MD of Kedia Commodities, the case for a 0.25% rate hike has become stronger after recent jobs data. If inflation numbers show a spike this Friday, the Fed will possibly go for a rate hike.

This would be negative for precious metals, gold and silver. Gold prices have already slid below $4400 per ounce on Monday, while silver is closer to $65.50 per ounce. Kedia predicts that if the Fed hikes interest rates, gold prices could come down to $4150 per ounce and silver could slide to $58 levels.

Domestically, gold prices may drop to Rs 1,41,000 levels from the current Rs 1,52,000 levels, while silver could fall to Rs 2.20 lakh per kg from Rs 2.50 lakh per kg. Kedia finds these levels to be good buying opportunities for investors.