Gold and silver prices moved lower in early trade on Wednesday, August 19, as rising crude oil prices and renewed uncertainty over US-Iran relations strengthened expectations that the US Federal Reserve may have to keep interest rates higher for longer.
On the Multi Commodity Exchange (MCX), gold October futures fell 0.13% to ₹1,54,055 per 10 grams, while silver September futures declined 1.21% to ₹2,29,600 per kg . The fall came as investors turned cautious ahead of the release of the Federal Reserve’s July meeting minutes, which could provide fresh clues about the direction of US monetary policy.
The latest move in the domestic gold price today comes after a sharp decline in international bullion prices during the previous session. COMEX gold futures were down 0.28% at $4,450.80 an ounce in morning trade, while silver fell 1.38% to $63.15 an ounce. The LBMA spot gold price stood at $4,403.50 an ounce at the August 18 PM fixing.
The pressure on precious metals is closely linked to developments in the oil market. Brent crude was trading near $92 a barrel, marking its fourth consecutive session of gains. The latest rise followed comments from US President Donald Trump that there were no ongoing negotiations with Iran, while uncertainty continued over the status of the strategically important Strait of Hormuz.
Higher crude prices have become an important concern for financial markets because they can add to inflationary pressure. For gold investors, this creates a complicated situation. Gold is traditionally viewed as a hedge against inflation and geopolitical uncertainty, but persistent inflation can also encourage central banks, particularly the US Federal Reserve, to maintain or raise interest rates.
That prospect can weigh on gold because the metal does not generate interest income. When interest rates rise, investors can find interest-bearing assets more attractive, increasing the opportunity cost of holding gold.
The Federal Reserve’s July meeting minutes, due later on Wednesday, have therefore become the immediate focus for bullion traders. The Fed left its policy rate unchanged at its previous meeting, but three of the 12 voting members of the Federal Open Market Committee supported a 25-basis-point increase. That split highlighted the growing concern among some policymakers about inflation.
Current market pricing suggests that investors are still leaning towards a rate hold, although the possibility of a September hike has not disappeared. The CME FedWatch Tool was indicating roughly a 65% probability of rates remaining unchanged and a 35% probability of a September rate hike. Another market update placed the probabilities at 64% and 36%, respectively, showing that expectations remain finely balanced.
The direction of the US dollar is providing some support to gold. The dollar index eased to 99.57 from 99.66 in the previous session. A weaker dollar generally makes gold cheaper for buyers holding other currencies and can limit the downside in international bullion prices.
That dynamic was visible in global trading, where gold recovered modestly after suffering a nearly 2% fall on Tuesday. Spot gold rose around 0.5% to $4,356.55 an ounce in early Wednesday trading, while US gold futures remained slightly lower. The recovery came as US Treasury yields eased from recent highs following a global bond-market sell-off.
The domestic gold rate has also been influenced by the movement in the rupee and international prices. The previous MCX session ended with domestic spot gold at around ₹1,53,626 per 10 grams. Wednesday’s October futures price of ₹1,54,055 therefore represents a modest recovery from that level, even though the contract was trading marginally lower during the morning session.
Silver has faced stronger selling pressure than gold. The silver price today declined 1.21% on MCX to ₹2,29,600 per kg, while international silver was down more than 1% in the morning trade. Silver tends to be more volatile than gold because it is influenced not only by investment demand but also by industrial demand.
The geopolitical backdrop, however, continues to provide a floor for bullion. Uncertainty surrounding the Strait of Hormuz and the broader US-Iran conflict could encourage investors to maintain exposure to traditional safe-haven assets. Both Washington and Tehran have made conflicting claims about the status of the waterway, keeping the situation fluid.
Another view is that gold could retain a positive longer-term bias as long as prices remain above ₹1,51,000. A sustained move above the prevailing trendline could potentially take MCX gold towards ₹1,58,000. However, traders are expected to remain cautious until the Fed minutes provide greater clarity on interest rates.
Beyond the minutes, markets will also watch upcoming US inflation data. The Federal Reserve’s preferred inflation measure, the Personal Consumption Expenditures (PCE) price index, is due on August 26 and could influence expectations ahead of the Fed’s September 15-16 policy meeting.