Gold & silver fall after Fed signals possible rate hike

Kolkata: Gold and silver prices fell on the Multi Commodity Exchange (MCX) on Thursday amid heavy selling, following overnight losses in global bullion prices after the US Federal Reserve signalled a possible interest rate hike later this year.

Jewellers said customers have started purchasing gold after a lull, albeit in small quantities given the continuing volatility, driven by the ongoing summer wedding season demand and the substantial fall in prices after scaling a record high of more than Rs 1.8 lakh per 10 grams at the beginning of the year.

MCX gold rate declined 1% to ₹1,52,306 per 10 gm, while silver prices fell 1.51% to ₹2,48,000 per kg. In Mumbai's spot market gold prices fell to ₹1.49 lakh per 10 gm, while silver declined to ₹2,43 lakh per kg,


"Customers are cautious but they have accepted the volatility in prices. Footfall has increased as the summer wedding season is underway," said Suvankar Sen, managing director, Senco Gold.

Sales of lower caratage jewellery have increased 15% year-on-year as consumers are trading down, according to jewellers.

"The US Fed's decision to keep rates unchanged, while indicating a possibility of further tightening later in the year, has led to a mixed outlook for gold," said Colin Shah, managing director, Kama Jewelry. "Typically, such scenarios weigh heavily on non-yielding assets like gold due to the natural strengthening of the US dollar, thus increasing the opportunity of holding bullion. Parallelly, the reported de-escalation of tensions between the US and Iran is likely to have a contrasting effect, reflecting as a minor cooldown in the rates."