Gold Prices Tumble Over 1% in India Amid Hawkish US Rate Hike Expectations

Gold and silver prices fell in India on Monday (August 31), with gold declining more than 1% on the Multi Commodity Exchange (MCX). The fall comes as global bullion prices remain under pressure amid a stronger US dollar, higher yields, and rising expectations of a US rate hike.

Gold futures for October delivery fell ₹2,045, or 1.31%, to ₹1.54 lakh per 10 grams on the MCX. Silver futures for December delivery declined ₹1,955, or 0.81%, to ₹2.40 lakh per kg.

Gaurav Garg, Head of Research at Lemonn, attributed the latest correction in bullion prices to changing expectations around US monetary policy. Hawkish comments from Fed Chair Kevin Warsh have increased expectations of a September rate hike, with markets now pricing in a significantly higher probability of a rate increase.

A stronger dollar can make dollar-denominated bullion more expensive for buyers in other currencies, and high US yields tend to weigh on gold and silver because both metals do not offer regular interest income. Garg noted that gold has extended its recent correction, while silver has also remained under pressure.