Silver Prices Plunge on Rate Hike Fears and Easing Tensions

Silver prices fell nearly 2% on the Multi Commodity Exchange (MCX) on Tuesday due to fears of a potential interest rate hike by the US Federal Reserve. The most active contract on MCX traded at ₹2,18,000 per kg, down ₹3,173 or 1.43% from the previous close of ₹2,21,173.

The Fed's decision has created uncertainty in the market, with traders pricing in a one-in-three chance of a rate hike this week. Citadel Securities expects the central bank to raise rates to reinforce Chairman Kevin Warsh's credibility on inflation.

Higher interest rates typically lift real yields and work against silver, which pays no income. Even the possibility of a rate hike is enough to cool buying in the metal.

The easing of tensions in West Asia also weighed on silver prices. President Donald Trump said the US was in good talks with Iran to end the conflict, pushing oil prices lower and softening inflation and rate-hike worries.