Gold Slides Rs 600 as Fed Hike Cools Demand
Indian gold prices dropped by Rs 600 following a hawkish Federal Reserve decision that dampened domestic buying interest.
Gold prices in India fell by Rs 600 on Thursday. The metal of 99.9 per cent purity closed at Rs 1,55,600 per 10 grams. This decline follows a day of weak domestic demand and global market adjustments. Silver remained stable at Rs 2.42 lakh per kilogram including all taxes. Local traders noted that limited buying activity weighed heavily on the gold market.
The drop aligns with overnight weakness in international bullion markets. The Federal Reserve delivered a hawkish policy message that influenced global asset prices. This sentiment pressured Indian prices despite some recovery seen in spot gold later in the day. The market reaction reflects immediate concerns over higher interest rates in the United States.
Fed Hike Signals Persistent Inflation
The US Federal Reserve raised its benchmark interest rate by 25 basis points. The new rate stands at 3.75 to 4 per cent. This marks the first rate increase in three years. Fed Chair Kevin Warsh emphasized persistent inflationary pressures. Stronger-than-expected August core inflation data reinforced these concerns.
The Fed’s median rate outlook for end-2026 moved up to 4.1 per cent from 3.8 per cent. This shift hints at the possibility of further rate hikes. Analysts noted that the tone of the communication was more significant than the hike itself. The move signals that monetary policy may remain restrictive for a longer period.
Global Markets Show Mixed Signals
Global spot gold recovered slightly as Treasury yields pulled back. The dollar index also softened, providing some support to bullion prices. Spot gold rose by USD 52.85 to USD 4,317.11 per ounce. This represents a gain of 1.24 per cent. Silver gained nearly 2 per cent to USD 64.06 per ounce.
The recovery was driven by a cooling in Treasury yields rather than gold-specific factors. Yields had touched their highest level since 2024 following the rate hike. The subsequent pullback gave gold some breathing room in global markets. Crude oil prices also declined slightly during this period.
Indian Traders Cite Weak Demand
Domestic weakness remained the primary driver for the local price drop. Traders pointed to a lack of buyer interest in the Indian market. This sentiment was amplified by the global hawkish cues from the Fed. The combination of local and global factors led to the Rs 600 decline.
According to GN auto markets and commodities reports, the situation reflects broader macroeconomic shifts. The market is adjusting to the new interest rate environment. Investors are reassessing their positions in precious metals. The next few days will likely see continued volatility as traders digest the Fed’s latest guidance.
