RBI raises repo rate by 25 basis points; gold and silver prices decline

The Reserve Bank of India's latest monetary policy decision to raise the repo rate by 25 basis points has sent ripples through India's precious metals market, with both gold and silver prices recording declines in response to the tightening measure.

The repo rate, the key interest rate at which the RBI lends to commercial banks, now stands at 5.50 per cent following the increase announced by the central bank. This adjustment is part of the RBI's broader inflation management strategy and reflects its commitment to controlling price pressures in the economy.

Precious metals typically move inversely to interest rate hikes, as higher borrowing costs reduce the appeal of non-yielding assets like gold and silver. Market participants noted that the rate increase has prompted investors to reassess their holdings in bullion, leading to downward pressure on prices in the domestic market.

The depreciation in gold and silver prices comes at a time when the RBI continues to balance growth concerns with inflation control. Market analysts expect precious metals prices to remain volatile in the near term as investors digest the monetary policy implications and adjust their investment portfolios accordingly.