Fed Rate Hike Sends Gold, Silver Prices Tumbling Amid Tightening Outlook

The US Federal Reserve raised its benchmark interest rate by 25 basis points on Wednesday (September 16), marking its first rate increase since 2023. This decision has sent shockwaves through the markets, with gold and silver prices declining in early trade on Thursday (September 17). COMEX gold was down 0.88% at $4,348.90 an ounce, while silver declined 0.90% to $64.335 an ounce.

The Fed's rate hike has shifted the focus for bullion investors from the rate increase itself to the Fed's outlook for further tightening, US Treasury yields, and the dollar. Prithviraj Kothari, managing director of RiddiSiddhi Bullions, noted that much of the expected rate hike was already priced into gold and silver.

Ashish Rajodiya, head of commodities at PL Capital, said the Fed's tone on future policy would determine the next move in bullion. With the Fed now signalling another increase, the outlook for US yields becomes particularly important for precious metals. Vedika Narvekar, research analyst at Anand Rathi Share and Stock Brokers, warned that gold could remain vulnerable if the Fed signals further tightening.