Silver futures on the Multi Commodity Exchange (MCX) plunged by ₹8,817 to ₹2.42 lakh per kg on Thursday, tracking weak global trends after the US Federal Reserve's latest policy signals strengthened the dollar and dampened investors' appetite for precious metals. The July delivery contract declined by ₹8,817, or 3.5 per cent, to ₹2,42,990 per kilogram in a business turnover of 11,188 lots, according to exchange data.
Fed Policy Signals Dent Bullion Appeal
The decline came after the US central bank kept interest rates unchanged but indicated that the fight against inflation remains far from over, prompting traders to reassess expectations for future monetary policy easing, analysts said. The Federal Reserve on Wednesday unanimously voted to maintain its benchmark interest rate in the 3.5-3.75 per cent range. However, nine of 18 members of the Federal Open Markets Committee (FOMC) projected that they see a rate hike this year.
"The downturn in precious metals can be attributed to a strengthening US dollar, as traders remain wary following a hawkish June Federal Reserve policy decision under new Chair Kevin Warsh," said Gaurav Garg, Research Analyst at Lemonn Markets Desk.
"Comex silver prices remained under pressure in the overseas trade on Thursday after the Federal Reserve kept interest rates unchanged, but signalled growing support for additional rate hikes, while maintaining its focus on bringing inflation back to target," said Pinky Yadav, Commodity Fundamental Analyst at Choice Broking.
Domestic and International Price Action
Silver prices in the domestic markets saw a sharper decline of more than 3 per cent on Thursday, according to Gaurav Garg. In the international markets, Comex silver futures for the July contract declined $2.36, or 3.34 per cent, to $68.40 per ounce in New York.
| Contract | Exchange | Previous Close | Current Price | Change | Change % |
|---|---|---|---|---|---|
| Silver July 2026 | MCX | ₹2,51,807/kg | ₹2,42,990/kg | -₹8,817 | -3.50% |
| Silver July 2026 | Comex | $70.76/oz | $68.40/oz | -$2.36 | -3.34% |
Analyst Outlook: Pressure to Persist
According to analysts, prospects for higher-for-longer interest rates tend to weigh on precious metals by boosting bond yields and the US dollar. "The division among policymakers, with half still anticipating at least one more rate hike this year, along with elevated inflation forecasts and slower GDP growth, reflects the Fed's ongoing focus on controlling price pressures even if it moderates economic growth," said Rajesh Palviya, Head of Research at Axis Direct. He added that higher yields and a firmer dollar could continue to exert pressure on bullion prices in the near term.
For commodity traders and procurement teams, the current environment suggests continued headwinds for silver and other precious metals. The Fed's hawkish stance reduces the appeal of non-yielding assets like bullion, while a stronger dollar makes dollar-denominated commodities more expensive for holders of other currencies. With the FOMC divided on the path of rates, market participants should remain vigilant for upcoming economic data releases and Fed commentary that could trigger further volatility.
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