Gold and silver prices opened lower on the Multi Commodity Exchange (MCX) on Tuesday, 18 August, as a jump in crude oil prices revived concerns that the US Federal Reserve and other major central banks could tighten monetary policy. MCX gold futures for October delivery stood at ₹1,55,090 per 10 grams, down 0.55% at around 9:25 AM, while silver contracts for September were trading 1% lower at ₹2,35,655 per kilogram.
Oil prices fuel rate hike expectations
Brent crude, the global benchmark, traded above $91 a barrel during the session. Rising oil prices tend to push up broader inflation, and higher inflation makes central banks more likely to raise interest rates. Although gold is often seen as a hedge against inflation, higher interest rates make non-yielding assets such as gold less attractive compared to interest-bearing instruments. The recent spike in crude stems from stalled talks between the US and Iran, with Iran reportedly adopting a more aggressive stance and the US ruling out an extension of the current ceasefire. The situation has raised the risk of supply disruptions through the Strait of Hormuz. President Donald Trump reiterated on Monday that Washington regards the strait as US territory and has total control there.
Key support and resistance levels
Market participants are now watching the minutes of the Fed’s July policy meeting, due on Wednesday, as well as the July Personal Consumption Expenditures price index — the Fed’s preferred inflation gauge — set for release on 26 August. The market currently sees about a one-in-three chance of a rate hike at the September 15–16 meeting, according to Pinky Yadav, Commodity Fundamental Analyst at Choice Broking. On the technical side, Manoj Kumar Jain of Prithvifinmart Commodity Research placed MCX gold support at ₹1,55,000 and ₹1,54,100, with resistance at ₹1,56,800 and ₹1,57,700. For MCX silver, he sees support at ₹2,36,000 and ₹2,33,300 and resistance at ₹2,40,000 and ₹2,42,400. Jigar Trivedi of IndusInd Securities said ₹1,55,000 should act as support for October gold contracts. Ravi Singh of Master Capital Services added that gold prices are holding above key exponential moving averages, with ₹1,52,000 now a crucial support level, keeping a buy-on-dips strategy intact.
Key takeaways
- MCX gold October futures fell 0.55% to ₹1,55,090 per 10 grams; silver September contracts dropped 1% to ₹2,35,655 per kg.
- Rising oil prices (Brent above $91/bbl) stoked fears of central bank rate hikes, which weigh on non-yielding gold.
- The Fed’s July meeting minutes and July PCE inflation data are the next major catalysts for the precious metals market.
- Technical analysts point to support at ₹1,55,000 for MCX gold; a close below that level could open the door to further downside.
Common questions
Why do higher oil prices hurt gold prices?
Higher oil prices increase the cost of energy and transport, pushing up consumer price inflation. Central banks, particularly the US Federal Reserve, often respond to elevated inflation by raising interest rates. Since gold pays no interest or dividend, a higher-rate environment makes holding gold less attractive compared to bonds or savings accounts, which can cause gold prices to fall.
What is the PCE price index and why does it matter for gold?
The Personal Consumption Expenditures (PCE) price index is the Federal Reserve’s preferred measure of inflation. If the data shows inflation remaining stubbornly above the Fed’s 2% target, it increases the likelihood that the central bank will keep rates higher for longer or even raise them further. That scenario is generally negative for gold prices. The July PCE report is due on 26 August and will be closely watched.
The coming days will be crucial for gold and silver traders, with the release of the Fed minutes and the PCE data likely to set the short-term direction. For the latest movements, check the live gold price on GoldRate.info.