Gold and Silver Defy Rate Hike with Record-Setting Prices on MCX
On September 21, gold and silver continued to hold near record territory on the Multi Commodity Exchange (MCX), as bullion prices absorbed the impact of the US Federal Reserve's first rate increase in over three years.
The MCX gold futures were trading around Rs 1,54,263 per 10 grams, up about 0.84%, while silver was near Rs 2,42,000 a kilogram, up about 0.16%.
Despite the conventional wisdom that higher interest rates hurt gold, bullion prices have been resilient in this case, according to experts. The reason lies in the fact that the Fed raised rates because inflation has been too high for too long, driven by energy costs. In such a scenario, the currency is losing purchasing power, which is exactly what gold is bought on.
Silver, however, has moved further due to its dual demand as an industrial metal and a monetary asset. Roughly half of silver's demand comes from industry, particularly in solar cells, electronics, and electrical contacts, making it more volatile than gold.