Gold and Silver Prices Plummet 2-3% Amid Strong Dollar and Rising Crude Oil

The gold and silver prices fell sharply on September 28 due to a stronger US dollar, higher US bond yields, and rising crude oil. On the Multi Commodity Exchange (MCX), October gold futures declined by 2.13% or Rs 3,214, to Rs 1,47,667 per 10 grams. December silver futures fell by 2.83% or Rs 6,661, to Rs 2,28,035 per kg.

The Comex gold price also dropped by 2.11% to $4,197.40 an ounce, while the silver price declined by 3.59% to $62.47 an ounce. The decline in prices was attributed to expectations of another interest rate hike by the US Federal Reserve, higher crude oil prices, and rising US bond yields.

The CME FedWatch Tool showed a 68.1% probability of a 25 basis point rate hike, which increased pressure on gold and silver as they do not generate interest income. The stronger dollar made dollar-denominated commodities more expensive for buyers using other currencies, reducing demand for gold and silver in global markets.

The Indian rupee weakened by 25 paise to 96.14 against the US dollar, partly cushioning the fall in international gold prices for Indian investors. However, the focus this week will remain on US inflation and employment data, along with movements in crude oil, the dollar, and US Treasury yields.