COMEX gold was down 0.88% at $4,348.90 an ounce, while silver declined 0.90% to $64.335 an ounce, according to the latest available data.
The Fed raised its key rate to about 3.9% on Wednesday (September 16), marking its first rate increase since 2023. Its latest projections indicated that policymakers expect the benchmark rate to rise to 4.1%, implying another 25-basis-point increase.
The decision has shifted the focus for bullion investors from the rate hike itself to the Fed’s outlook for further tightening, US Treasury yields and the dollar.
Why the Fed matters for gold
Higher interest rates and bond yields can weigh on gold and silver because they do not generate interest income. Higher yields can increase the opportunity cost of holding precious metals.
Prithviraj Kothari, managing director of RiddiSiddhi Bullions and president of the India Bullion and Jewellers Association, had said ahead of the Fed decision that much of the expected rate hike was already priced into gold and silver. He said the market’s attention would therefore turn to the Fed’s projections and commentary.
Ashish Rajodiya, head of commodities at PL Capital, had also said the rate hike itself was largely priced in and that the Fed’s tone on future policy would determine the next move in bullion.
With the Fed now signalling another increase, the outlook for US yields becomes particularly important for precious metals.
Vedika Narvekar, research analyst – commodities and currencies at Anand Rathi Share and Stock Brokers, had said gold could remain vulnerable if the Fed signals further tightening, while a more cautious stance could support a recovery.
Gaurav Garg, head of research at Lemonn, had similarly highlighted the importance of the Fed’s forward guidance for yields, the dollar and precious metals.
Oil prices ease, but West Asia risk remains
Crude oil prices declined on Thursday (September 17), extending the previous session’s losses.
Brent crude futures fell 1.2% to $104.59 a barrel, while US West Texas Intermediate crude declined 1.1% to $101.29. Both contracts had fallen about $3 on Wednesday (September 16).
The decline followed reports that Saudi Arabia is offering additional crude cargoes to Asian refiners through ship-to-ship transfers off Oman’s Sohar port. The development has eased some concerns about supply disruptions following attacks on Saudi Arabia’s East-West pipeline.
The decline in oil prices can reduce some of the inflation pressure that had been weighing on markets. However, geopolitical risks remain as the conflict in the West Asia continues to threaten energy supplies.
Garg had noted that elevated crude prices remain an inflationary risk for India, while a weaker rupee can also influence domestic precious-metal prices.
Gold’s safe-haven role has not been straightforward
Gold’s performance during the 2026 geopolitical turmoil has also differed from the traditional safe-haven narrative.
Anand K. Rathi, co-founder of MIRA Money, said gold has been volatile this year and that investors and institutions can sell the metal to raise cash during periods of heightened uncertainty. This can lead gold to decline even when geopolitical risks are rising.
At the same time, he pointed to continued demand from central banks as an important structural factor. He noted that Chinese gold ETFs added around 11 tonnes in August, taking their holdings to about 293 tonnes, while buying by Chinese gold ETFs had reached around 45 tonnes so far this year.
Rathi said the broader accumulation of gold by central banks reflects efforts to diversify reserves and reduce dependence on the US dollar. This could remain a longer-term support for gold even as monetary policy creates near-term volatility.
Silver has a different demand story
Silver is also responding to the same interest-rate and dollar factors as gold, but its industrial demand gives it an additional driver.
Rational Equity Asset Management, in its commodity outlook, highlighted structural demand from areas such as renewable energy and electrification. It also cited a projected 46-million-ounce silver supply deficit in 2026.
The firm argued that mining companies could benefit from higher metal prices, citing cash-flow yields for miners. However, those valuation and return comparisons are the firm’s assessment and are separate from the near-term price outlook for bullion.
For investors looking at gold and silver through financial products, Vikram Subburaj, CEO of Giottus, said implementation can include ETFs alongside physical holdings. He said the recent correction should be viewed in the context of the substantial rally that preceded it and that investors should avoid reacting to sharp intraday moves.
Subburaj also said staggered buying can help long-term investors manage entry-point risk, particularly while US yields and the dollar remain sensitive to economic data.
What Indian investors should watch
Indian gold and silver prices are influenced not only by international bullion prices but also by the rupee-dollar exchange rate and domestic premiums.
A weaker rupee can cushion domestic gold prices when international prices decline, while a stronger rupee can have the opposite effect.
Gold in the national capital rose ₹1,200 to ₹1.55 lakh per 10 grams on Wednesday, while silver jumped ₹7,400 to ₹2.42 lakh per kg, according to local traders.
For now, bullion markets are balancing two opposing forces: a more restrictive US monetary-policy outlook on one side and geopolitical risks, central-bank demand and structural demand for precious metals on the other. US yields, the dollar, crude prices and further Fed guidance will remain key variables for gold and silver in the near term.
-With agencies inputs
