Gold Prices Plummet as US Interest Rates Hike Weighs Heavy

The gold market experienced volatility in early September due to fluctuations in US interest rates and dollar values. According to recent data, international spot gold rebounded by more than 2% on September 17, settling at $4,360 an ounce, while silver gained over 4%. In India, however, the price of 24K gold fell ₹1.53 lakh per 10 grams, with a decline of about ₹60 per gram compared to the previous day.

The US Federal Reserve's decision to hike the target range of the federal funds rate by 25 basis points to 3.75%-4% has had a significant impact on the gold market. High yields and a strong dollar could weigh on gold, making it less attractive to investors. Conversely, low yields, a weak dollar, and safe-haven demand would be positive for the metal.

The MCX gold price faced downward pressure due to the Fed rate hike, with the October contract falling by more than ₹1,300 and trading below ₹1.51 lakh per 10 grams on September 17. Silver on the MCX was also volatile, trading at around ₹2.30-₹2.33 lakh per kg.