MCX gold and silver volatile as Fed hold and Middle East tensions fuel rate hike bets
Precious metals on India’s Multi Commodity Exchange faced early volatility Thursday as a divided US Federal Reserve and renewed Middle East conflict kept interest rate uncertainty high for investors.
Gold and silver futures on India’s Multi Commodity Exchange traded with early volatility Thursday morning following the US Federal Reserve’s decision to hold interest rates steady. August gold futures remained nearly flat at ₹1,41,856 per 10 grams, while September silver contracts dipped 0.51 percent to ₹2,16,376 per kilogram.
The central bank maintained its target range between 3.5 percent and 3.75 percent for the fifth consecutive meeting on 29 July. However, the 9-3 vote revealed underlying division, with three policymakers dissenting in favor of an immediate 25-basis-point increase.
This divided stance, coupled with Chairman Kevin Warsh’s reiterated commitment to a 2 percent inflation target, pushed the US dollar index near 101 and lifted 10-year Treasury yields by 6 basis points to 4.68 percent. Compounding the macroeconomic pressure, fresh US military strikes on Iran have driven crude oil prices toward $90 per barrel, stoking fresh inflation concerns.
For market participants, the interplay between elevated energy costs and monetary policy remains the primary driver of precious metals valuations. While gold traditionally serves as an inflation hedge, its appeal diminishes when higher interest rates increase the opportunity cost of holding non-yielding assets.
Market pricing now reflects a 63 percent probability of a rate hike at the September meeting, according to CME Group’s FedWatch tool. Ravi Singh, Chief Research Officer at Master Capital Services, noted, "The US Fed policy statement carried a hawkish undertone, with the decision passing by a 9-3 vote, as three Fed officials backed an immediate 25-basis-point rate hike. Investors are now shifting their focus to the September meeting, as persistent inflation risks from higher oil prices, tariffs and AI-related demand continue to keep expectations of another rate hike alive."
Singh added that as long as the ₹1,40,000 level holds, gold may test the ₹1,45,000 upper trading band. A decisive break below this support could trigger fresh selling pressure and open the door for a decline toward ₹1,36,000.
Manoj Kumar Jain of Prithvifinmart Commodity Research outlined immediate support for gold at ₹1,41,100 and ₹1,40,400, with resistance at ₹1,42,650 and ₹1,43,300. He advised, "We suggest long-term investors to accumulate gold and silver in every price drop, while traders can hold long positions in gold with a stop loss below ₹1,39,000 and in silver below ₹2,13,000 on a closing basis."
Traders are now bracing for the release of June US Personal Consumption Expenditure data and the advance Q2 2026 GDP estimate later Thursday. These figures will provide further clarity on the inflation trajectory and the central bank’s next policy moves.
