Silver and Gold Prices Face Pressure Ahead of Federal Reserve Meeting

Precious metals faced renewed downward pressure in domestic and international markets as investors awaited the Federal Reserve's upcoming policy meeting and commentary from central bank officials. On the Multi Commodity Exchange (MCX), domestic futures saw notable declines over the past week, reflecting broader economic headwinds driven by elevated bond yields, a stronger US dollar, and fluctuating energy costs.

In domestic trading, gold futures for December delivery on the MCX recently experienced a weekly drop of nearly 4 percent, closing at approximately Rs 1,42,800 per 10 grams. Meanwhile, silver suffered a steeper decline, dropping 7.14 percent to settle below the psychological threshold of Rs 2 lakh, closing at Rs 1.96 lakh per kilogram. Analysts noted that silver's drop mirrored weakness across industrial metals and softer demand as industries adjust to elevated price levels.

Internationally, spot gold managed to climb back above the $4,000 threshold, rising 0.5 percent to $4,014.49 per ounce after hitting a multi-month low earlier in the week. US gold futures for December delivery also gained 0.5 percent to reach $4,028.40 per ounce. UBS analyst Giovanni Staunovo noted that the $4,000 mark is being treated by some market participants as a buying opportunity.

"This 4,000 level is seen by some as a buying opportunity. So we should eventually see slightly stronger purchases stepping in, because it has also, from a technical perspective, helped very well in the past," Staunovo said. However, he added that potential price gains remain capped by concerns that the Federal Reserve might maintain higher interest rates or pursue further tightening.

Market participants are currently pricing in a low probability of an immediate rate cut or hike at the upcoming decision, though expectations for future tightening later in the year remain elevated according to CME Group data. Higher interest rates typically increase the opportunity cost of holding non-yielding precious metals, putting sustained pressure on bullion.

A recent report from HSBC Global Investment Research indicated that the silver market recorded a deficit of 140 million ounces in 2025, but forecast that the shortfall will narrow sharply to 5 million ounces in 2026 before widening moderately to 12 million ounces in 2027. "Moderating deficits help explain our view that prices are near equilibrium levels and may be supportive but do not augur for robust rallies," the report stated.

Additional pressure on commodities has stemmed from volatile crude oil prices and geopolitical tensions in the Middle East, which have historically fueled safe-haven demand while simultaneously strengthening the US dollar. Analysts emphasize that the Federal Reserve's policy statement and subsequent commentary from leadership will be critical in determining whether precious metals stabilize near current levels or extend their corrective trends.