Precious metals—gold and silver—have retreated sharply in Wednesday’s evening trade after a hotter-than-expected US Producer Price Index (PPI) reading, along with a sharp rebound in crude oil prices, dented safe-haven demand.
The April futures contract on COMEX gold fell $171, breaking below the key $5,000 mark to reach $4,837 per troy ounce on 18 March, marking the lowest level since 6 February. Today’s decline has contributed to a 7.4% drop in the yellow metal in March so far; however, year-to-date returns remain positive at 12%.
The May silver contract on COMEX also crashed, falling $4.30 per troy ounce to reach a day’s low of $76.63. The white metal, which is more volatile than gold, is down more than 17.7% in the current month so far, and compared to gold, silver’s 2026 returns are lower at 8.9%.
The headline Producer Price Index (PPI) rose 0.7% in February, following January’s 0.3% increase, the US Department of Labor announced on Wednesday. The latest inflation data came in hotter than expected, as economists had been looking for a 0.3% increase.
The higher-than-expected PPI, which is viewed as a leading inflation indicator as producers pass higher input costs on to their customers, comes just ahead of the Federal Reserve policy outcome.
Precious metals had already been under pressure lately due to fading expectations of near-term rate cuts by the Federal Reserve, while a rising US dollar is making dollar-priced commodities more expensive for other currency holders.
Meanwhile, Brent crude oil prices have bounced back sharply from the day’s low, surging 9% to $109 per barrel following reports of an attack on Iran’s South Pars gas field, which is shared with Qatar.
Fed expected to leave rates unchanged for a second time
The US Federal Reserve’s policy decision is due later in the day, where policymakers are widely expected to hold rates steady, with traders anticipating only one 25-basis-point cut, possibly in September.
Investors are assessing that higher crude oil, gas, and fertiliser prices, triggered by the ongoing war in the Middle East, could prompt the central bank to hold interest rates until late 2026.
Before pausing rate cuts in January, policymakers had reduced short-term interest rates three consecutive times, indicating that the impact of US President Donald Trump’s tariffs on the economy was limited.
However, the ongoing US-Iran conflict has led to a sharp rise in energy prices, making policymakers’ jobs more difficult, given an already soft labour market.
MCX gold drops ₹4,000 per 10g; silver back to ₹2.42 lakh per kilo
In the domestic market, the April gold futures contract on MCX dropped by ₹4,435 per 10 grams to the day’s low of ₹1,51,550, marking the lowest level since 17 February. The May silver futures contract, too, eased by ₹10,310 per kilogram to ₹2,42,803. The white metal was last seen around these levels on 20 February.
Disclaimer: We advise investors to check with certified experts before making any investment decisions.
