India's Bullion Prices Plunge Amid Weaker Global Cues and Rate Hike Expectations

Gold and silver prices have plummeted on India's Multi Commodity Exchange (MCX) due to weaker global cues, a stronger US dollar, higher US yields, and profit-taking. On Monday, August 31, gold futures for October delivery fell ₹2,045, or 1.31%, to ₹1.54 lakh per 10 grams.

Globally, gold futures were down 0.51% at $4,432.51 an ounce, while silver fell 1.04% to $68.22 an ounce. The latest correction in bullion prices has been linked to changing expectations around US monetary policy.

According to Gaurav Garg, Head of Research at Lemonn, hawkish comments from Fed Chair Kevin Warsh have increased expectations of a September rate hike. Markets are 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. Higher US yields and a firmer dollar tend to weigh on gold and silver because both metals do not offer regular interest income.