Gold Prices Crash Amid Fed Hike Fears

Gold and silver prices plummeted up to 2% on the Multi Commodity Exchange (MCX) due to weak global cues. MCX gold October futures dropped 1.19% to ₹1,50,973 per 10 grams, while MCX silver December contracts fell by 1.70% at ₹23,100 per kg.

The US Federal Reserve's potential interest rate hike on Wednesday has sparked concerns about a possible rise in inflation and subsequent impact on precious metals.

Vandana Bharti, Head of Commodity Research at SMC Global Securities, stated that gold prices have already seen a meaningful correction from recent highs as the market begins to price in the possibility of a Fed rate hike. She believes that Wednesday's decision will be a key trigger for the next big move.

Bharti warned that if the Fed delivers a 25-basis-point rate hike, gold could see another 1-2% correction. However, she also predicted that a surprise 50-basis-point hike would lead to a sharp spike in the dollar and trigger aggressive profit booking in gold, resulting in a steeper correction.