The precious metals market turned sharply lower after US Federal Reserve Chairman Kevin Warsh delivered a hawkish message at the Jackson Hole symposium. Spot gold fell to $4,428.54 per ounce by early Tuesday trade, while domestic MCX gold declined to ₹153,997 per 10 grams. The reversal has prompted analysts to recalibrate their year-end 2026 projections, with some seeing further downside if rate hikes materialise.
Jackson Hole impact on gold and silver
Warsh said the Fed would "have work to do" if inflation does not convincingly move towards the 2% target, pushing bond yields higher and triggering a 3% drop in gold last Friday. Spot silver also slipped to $66.42, while MCX silver initially fell before recovering to ₹235,800 per kg. The sell-off erased gains that had taken gold to its highest in three months just days earlier.
Market-implied probabilities for a US rate hike in September rose to 66%, with December odds at 89%, according to the CME FedWatch Tool. Higher interest rates increase the opportunity cost of holding non-yielding assets such as gold.
Geopolitical tensions add pressure
Fresh hostilities in the Strait of Hormuz and renewed US threats against Iran have lifted oil prices, stoking inflation expectations. That has added another headwind for gold, because higher inflation could prompt the Fed to keep monetary policy tight for longer. The combination of rate hike fears and geopolitical uncertainty has kept bullion prices volatile in recent sessions.
Analyst views on the 2026 outlook
Carsten Menke of Julius Baer said the outlook is clearer for gold than for silver. He pointed to structural central bank buying as a strong source of demand for gold, a factor silver does not benefit from. Silver, he noted, is still recovering from a speculative frenzy that left many investors with losses, while industrial demand faces headwinds from substitution by aluminium and copper and a weaker outlook for Chinese solar manufacturers. Julius Baer maintains a constructive stance on gold but remains neutral on silver, expecting elevated volatility as the Fed provides less forward guidance under Warsh.
Monarch PMS outlined three scenarios for the end of 2026 with assigned probabilities:
- Base case (55% probability): Gold between ₹1,31,170 and ₹1,43,372 per 10 grams; silver between ₹2,13,543 and ₹2,59,302 per kg. This assumes the Fed holds rates through September, energy prices normalise, real yields plateau, and central bank purchases continue at about 250 tonnes per quarter.
- Bear case (20% probability): Gold could fall to ₹1,03,737–₹1,18,992 per 10 grams; silver to ₹1,37,282–₹1,67,790 per kg.
- Bull case (20% probability): Not detailed in the scenario breakdown provided, but the base case carries the highest weight.
Key takeaways
- Gold fell after Fed Chair Warsh's hawkish Jackson Hole speech, with spot at $4,428.54 and MCX at ₹153,997 per 10 grams.
- Rate hike probabilities rose to 66% for September and 89% for December, pressuring non-yielding gold.
- Julius Baer is constructive on gold due to central bank buying, neutral on silver; Monarch PMS sees a 55% chance of gold staying in a range of ₹1,31,170–₹1,43,372.
- Geopolitical tensions in the Middle East and rising oil prices are adding uncertainty to the inflation and rate outlook.
Common questions
Where is gold trading now?
Spot gold was at $4,428.54 per ounce in early trade on Tuesday, while MCX gold was at ₹153,997 per 10 grams. Silver traded at $66.42 spot and MCX silver at ₹235,800 per kg.
What did analysts say about gold's 2026 outlook?
Julius Baer expects gold to benefit from ongoing central bank buying and rates it constructive, while remaining neutral on silver. Monarch PMS assigns a 55% probability to a base scenario where gold trades between ₹1,31,170 and ₹1,43,372 per 10 grams by end-2026, assuming the Fed holds rates through September.
The live gold price continues to reflect the tug-of-war between hawkish Fed rhetoric and geopolitical uncertainty, with traders watching key US labour data due later this week for further direction.