Rate Hike Fears Trump Safe-Haven Demand for Gold and Silver
Gold and silver prices declined on Monday as investors reassessed their expectations for US interest rates, outweighing support from renewed geopolitical tensions in the Middle East. The Indian retail market saw 24-carat gold fall by 1.22% to ₹1,54,940 per 10 grams, while 999 silver declined by 1.37% to nearly ₹2,38,870 per kg.
The decline came as investors reacted to hawkish signals from Federal Reserve Chair Kevin Warsh, leading to expectations of higher interest rates that have weighed on precious metals. Gold and silver do not generate regular interest income, making them less attractive in a rising rate environment. Bullion prices failed to gain from safe-haven demand due to concerns over interest rates and yields.
The geopolitical uncertainty, particularly the escalating tensions between the US and Iran, added another layer of uncertainty to financial markets. Oil prices rose sharply on Monday following the latest developments, with Brent crude increasing significantly.