Gold and silver ETFs slip as Federal Reserve's hawkish outlook pressures prices

Gold prices fell sharply in the domestic spot market, sliding 1.22 per cent to settle at ₹54,940 per 10 grams during Tuesday's session. The decline reflected broader weakness in the precious metals complex as investors reacted to the Federal Reserve's hawkish communications regarding its inflation-fighting stance.

Silver futures also came under pressure, with prices retreating 0.5 per cent to ₹2,40,011 per kilogram. The relative underperformance of both metals this week—down approximately 4 per cent—underscores growing market concern about the trajectory of U.S. interest rates and their implications for non-yielding assets like gold and silver.

The Federal Reserve's emphasis on maintaining restrictive monetary policy has weighed heavily on precious metals, which typically benefit from lower interest rates and currency weakness. Higher rates increase the opportunity cost of holding bullion, as investors can secure better returns through fixed-income instruments.

Traders are now closely monitoring upcoming economic data and Federal Reserve communications for signals on the future path of policy rates. For Indian investors, the rupee's strength against the dollar has compounded the headwinds facing precious metals, making imports relatively more expensive.