Gold, Silver Prices Plummet Amid US Interest Rate Hopes and Rising Oil Costs

Gold and silver prices took a breather on Tuesday as investors weighed changing expectations around US interest rates, rising oil prices, and fresh geopolitical tensions. The prices of both precious metals fell, with gold down 0.30% to Rs 1,55,470 and silver down 0.96% to Rs 2,35,763.

The main factor influencing gold and silver prices is the outlook for interest rates in the US. Markets are now less worried about a rate hike by the US Federal Reserve next month due to weaker economic numbers, including unexpected job losses in July, softer-than-expected consumer inflation, and weaker retail sales.

Dr Renisha Chainani, Chief Research Officer at Augmont, said that gold and silver came under pressure as fears of a US interest rate hike eased. Investors will now await the minutes from the Federal Reserve's latest meeting for fresh clues on the policy path ahead.

The probability of the Fed keeping rates unchanged has shifted towards nearly 65%. Oil prices are another factor to watch, with crude prices moving higher after Iran said it would shift to a 'fully offensive' military posture. Elevated energy prices can add to inflationary pressures and make central banks find it harder to cut interest rates or keep rates high for longer.