Gold and silver prices fell sharply on the Multi Commodity Exchange (MCX) on Wednesday, 20 May, with both precious metals sliding over 1 per cent as investors grew increasingly anxious about rising US inflation and the prospect of higher Federal Reserve interest rates. The selloff extended to international markets, where COMEX benchmarks also traded in the red.

MCX Price Movement

Gold futures (June 5) on the MCX hit an intraday low of ₹1,57,959, declining as much as 0.7 per cent or ₹1,121. At the time of reporting, the yellow metal was trading at ₹1,58,369, down 0.45 per cent or ₹711. It had briefly touched an intraday high of ₹1,60,378, up 0.81 per cent or ₹1,298, before reversing course.

Silver futures (July 3) fared worse, slipping 1.21 per cent or ₹3,269 to an intraday low of ₹2,66,850. The white metal was last seen trading at ₹2,68,970, down 0.43 per cent or ₹1,149. Both metals opened the session at ₹1,58,974 (gold) and ₹2,67,230 (silver) on the MCX.

Global Markets Follow Suit

The domestic weakness mirrored pressure in international markets. COMEX gold declined 0.49 per cent to $4,462 per ounce, while COMEX silver slipped 0.17 per cent to $73.868 per ounce. Commodity market experts noted that the dual pressure of inflation risk and rate uncertainty has weighed on both metals simultaneously — a pattern that has emerged with increasing frequency this year.

Why Prices Are Under Pressure

According to commodity market analysts, the primary driver is a reassessment of US Federal Reserve policy. Rising inflation concerns have significantly reduced expectations of rate cuts, while speculation around possible rate hikes later in the year has grown. Higher interest rates typically increase the opportunity cost of holding non-yielding assets such as gold and silver, making them less attractive to investors.

Geopolitical risk added another layer of complexity. US President Donald Trump warned that Washington could resume strikes on Iran within 'two or three days' if Tehran failed to accept peace terms. The ongoing conflict has disrupted shipping through the Strait of Hormuz, pushing crude oil prices higher and intensifying global inflationary pressures — a dynamic that, paradoxically, would ordinarily support gold as a safe haven but is being offset by the dominant rate-hike narrative.

Silver's Additional Headwinds

For silver, the decline also reversed a recent run-up that had been supported by optimism around AI-linked stocks and rising demand from data-centre infrastructure expansion. Analysts noted that as that tailwind fades amid broader risk-off sentiment, silver has lost a key near-term catalyst. This makes it more vulnerable to macro rate pressures than gold in the current environment.

Broader Market Context

Domestic equity markets also opened lower on Wednesday, with both the Sensex and Nifty trading in negative territory during early trade, reflecting a broad risk-averse mood among investors. How US inflation data and Fed signals evolve in the coming sessions will likely determine whether gold and silver find support or extend their losses.