Gold, silver plunge up to 3% as oil surge, rate-hike bets trigger sell-off. What lies ahead?

Precious metals came under heavy selling pressure in the week’s first trading session, with MCX gold and silver falling sharply on Monday as rising oil prices fuelled inflation concerns and strengthened expectations of further interest rate hikes by the US Federal Reserve.

On the MCX, October 2026 gold futures declined Rs 3,656, or 2.42%, to Rs 1,47,225 per 10 grams while December 2026 silver futures fell Rs 7,563, or 3.22%, to Rs 2,27,133 per kg at the latest check.

The sell-off was also visible in international markets. Spot gold was down 1.5% at $4,223.95 per ounce, while US gold futures declined 1.5% to $4,257.90. Spot silver fell 2.6% to $62.64 per ounce, platinum declined 2.1% to $1,741.45 and palladium dropped 2.1% to $1,239.95.

Gold breaks key support

MCX gold opened with a gap-down at Rs 150,100 and immediately slipped towards Rs 148,000, falling 1.80% at one point. The metal broke below the Rs 150,000–Rs 150,700 zone, which had previously acted as support and is now likely to act as resistance. It has also slipped below its 100-day EMA.

“Immediate resistance is at Rs 150,000–Rs 150,700, followed by Rs 152,000–Rs 152,600. On the downside, immediate support is at Rs 147,300–Rs 148,000, followed by Rs 145,300–Rs 146,000, near the 200-day EMA. The RSI at 37.48, below its signal line, points to weak momentum,” said Ponmudi R, CEO of Enrich Money.

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The broader bias has turned negative, with a sustained move above Rs 150,000 needed to stabilise the setup. A decisive break below Rs 148,000 could expose gold to further downside towards Rs 146,000.

Oil prices, rate-hike bets weigh on bullion

The decline in precious metals came as crude oil prices and bond yields moved higher, keeping inflation risks in focus.

The increase in oil prices was driven by mixed indications on supply flows. Iran said diplomacy remained the only route to resolving its conflict with the United States and Israel, after US President Donald Trump said he had rejected an Iranian proposal to reopen the Strait of Hormuz and bring the fighting to an end. Oil prices later recovered more than 1%.

At last check, Brent crude was at $107.89 per barrel, while WTI crude was trading 3.4% higher at $95.54 per barrel.

Market pricing now points to a roughly 66% probability of another rate hike in October, following this month’s increase in the federal funds rate to 3.75%–4.00%. Higher bond yields and elevated oil prices, analysts said, are weighing on non-yielding bullion.

Dollar and yields remain key drivers

The decline in gold followed the sell-off in international bullion, with the Federal Reserve’s rate path, the dollar and Treasury yields remaining key drivers. A weaker rupee provided only a partial cushion to domestic gold prices.

Pinky Yadav, Commodity Fundamental Analyst, Choice Broking, said MCX gold prices opened lower and maintained a bearish bias as the dollar index stayed near two-month highs.

“Stalled US-Iran negotiations kept oil prices elevated, strengthening expectations for further Federal Reserve tightening and supporting demand for the greenback. Several Fed officials cited resilient growth and a strong labor market as reasons for potential additional hikes. Investors now await the preferred inflation gauge and key employment data this week for further monetary-policy clues,” Yadav said.

Disclosure: This article has been written by Kumar Gaurav, who is not a SEBI-registered Research Analyst or an Investment Adviser. Gaurav and their ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here
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