Gold and Silver Prices Cool Amid US Rate Hike Fears and Iran Tensions

Precious metals prices have cooled off on the Multi Commodity Exchange as investors weigh a potential September interest rate hike by the Federal Reserve against rising geopolitical risks and upcoming US job market reports.

The new month has seen gold and silver futures retreat from recent highs, with gold futures for October delivery dropping ₹6,157 to settle at ₹1.56 lakh per 10 grams, while silver contracts for September delivery saw a sharp decline of ₹9,893, closing at ₹2.36 lakh per kilogram.

The uncertainty regarding US monetary policy is the primary driver behind this shift in momentum, with Federal Reserve Chair Kevin Warsh's remarks at the Jackson Hole symposium held on August 28 signaling concern over services inflation and leading markets to price in a higher probability of an interest rate hike in September.

Data from the CME FedWatch tool indicates a 48% chance of such a move, which would typically put pressure on gold prices as the metal does not pay interest, making yield-bearing assets like government bonds more attractive to investors when rates rise.