Source : INDIA TODAY NEWS
Gold investors who watched the yellow metal scale record highs earlier this year are now witnessing an equally dramatic reversal.
MCX gold prices have fallen more than 26% from their all-time intraday high of Rs 1,92,991 per 10 grams to around Rs 1,41,977, marking one of the sharpest corrections in recent years. Silver, too, has come under heavy selling pressure as investors move away from precious metals.
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Globally, gold is hovering near a seven-month low, weighed down by expectations that the US Federal Reserve could raise interest rates again this year, a stronger US dollar and investors shifting money into equities amid the artificial intelligence (AI) boom.
So, why are gold and silver falling, and could prices slide even further?
WHY ARE GOLD PRICES FALLING?
The biggest reason is the changing outlook for US interest rates.
Markets now see a 66% chance that the US Federal Reserve could raise rates in September, according to CME FedWatch data. Higher interest rates make non-yielding assets such as gold less attractive because investors can earn better returns from interest-bearing investments.
The US dollar has also strengthened sharply, with the Dollar Index trading above 101, its highest level since May 2025. Since gold is priced in dollars, a stronger greenback usually puts pressure on bullion prices.
Gold has now fallen more than 6% since last week’s Federal Reserve meeting and briefly slipped below the psychologically important $4,000-an-ounce mark for the first time since November 2025.
SILVER ALSO UNDER PRESSURE
The weakness has not been limited to gold.
Spot silver also slipped sharply to around $56 an ounce earlier this week before recovering slightly.
Unlike gold, silver is influenced not only by investment demand but also by industrial consumption. However, the current selloff has largely been driven by the same factors hurting gold—a stronger dollar and rising expectations of higher US interest rates.
WHAT SHOULD INVESTORS KNOW?
Kaynat Chainwala, AVP – Commodity Research at Kotak Securities, said the shift in Federal Reserve expectations remains the biggest reason behind the decline.
“Spot gold extended its decline to $3,959 per ounce, a fresh seven-month low, while spot silver slipped to $56 per ounce earlier today, with both metals weighed down by a resurgent US dollar and rapidly repricing Federal Reserve rate expectations,” she said.
According to Chainwala, markets have turned more hawkish after Federal Reserve Chair Kevin Warsh’s first policy meeting, where nine of the nineteen policymakers projected at least one interest rate hike before the end of the year.
“Markets are now pricing in up to two quarter-point increases through December, lifting short-dated Treasury yields and reinforcing dollar strength. Adding to the pressure, the ECB warned that inflation could remain above target for an extended period, broadening the global tightening narrative,” she added.
THE AI BOOM IS ALSO HURTING GOLD
Another factor weighing on bullion is the growing shift in investor preference towards equities.
According to analysts, exchange-traded funds (ETFs) backed by gold have witnessed outflows as investors rotate into stock markets, particularly technology and AI-related companies.
The AI boom has prompted many investors to move money away from traditional safe-haven assets like gold in search of higher returns.
SHOULD YOU BUY THE DIP?
Despite the recent correction, analysts believe the long-term investment case for gold remains intact.
Gold continues to act as a hedge against inflation, geopolitical uncertainty and currency volatility.
However, in the near term, prices could remain under pressure if the US Federal Reserve continues signalling tighter monetary policy or if the dollar strengthens further.
Investors are now closely watching the US Personal Consumption Expenditures (PCE) inflation data—the Fed’s preferred inflation gauge—for clues on the future path of interest rates.
For Indian investors, the correction could offer an opportunity to gradually accumulate gold, but experts advise against making large lump-sum purchases until there is greater clarity on the US interest rate outlook.
With the Fed, the dollar and global bond yields dictating the direction of precious metals, gold and silver may remain volatile in the weeks ahead.]
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)
– Ends
SOURCE :- TIMES OF INDIA
