Oil's Decline Fuels Hopes for Unchanged Interest Rates, Boosting Gold Prices

Gold and silver prices surged on the Multi Commodity Exchange (MCX) Thursday following a sharp decline in oil, which raised hopes that the US Federal Reserve will keep interest rates unchanged.

The MCX silver futures for September 2026 delivery rose by Rs 3,400 to Rs 2,42,999 per kg, while gold futures for October 2026 delivery increased by Rs 1,285 to Rs 1,60,898 per 10 grams.

The rally in precious metals was fueled by a falling dollar and concerns about dollar debasement after the US Treasury announced an expansion in purchases of older long-dated bonds. This move has investors closely watching the remarks of U.S. Federal Reserve Chair Kevin Warsh at the annual Jackson Hole symposium for clues on the central bank's policy direction.

Markets are pricing in a 36.5% probability of a US rate hike in September and a 72.7% chance of a hike by December, according to the CME FedWatch Tool. However, gold is widely viewed as a hedge against geopolitical and economic risks, which may continue to support prices despite higher interest rates making it less attractive.