Precious metals drop sharply as silver and gold hit multi-month lows

Silver prices dropped sharply on Friday with the December delivery contract on the Multi Commodity Exchange losing ₹10,577 per kg. The contract fell past the ₹1.80 lakh mark to touch a low of ₹1,79,600 per kg. This latest drop pushed the white metal's losses for October to nearly ₹45,000 per kg, making it on course for its worst monthly drop of 2026. Silver previously enjoyed a strong bull run in 2025, but it has now given up over half of those gains. Gold prices also dropped for a third day in a row, falling by ₹4,347 per 10 grams to reach ₹1,38,249, which is the lowest price since late March. Gold has now retreated by ₹10,787 in October after falling ₹5,400 in September. From its highest peak, silver has lost 57% of its value while gold has dropped ₹42,321 from its record peak.

Causes

The sharp sell-off in precious metals is driven by persistent inflation, rising crude oil costs, and growing expectations that interest rates will stay high in the United States. The US Personal Consumption Expenditures price index grew 0.5% in September, while annual inflation went up to 3.6%. The Federal Reserve kept interest rates steady at 3.75% to 4% in a 10-2 vote, but two members wanted a rate hike. Traders now see a 75% chance of a rate increase in December based on the CME FedWatch Tool. Higher energy costs and ongoing supply risks from the war in the Middle East are keeping inflationary pressures high across global markets.

Context

Precious metals like gold and silver are often seen as safe investments when economic uncertainty rises. However, when central banks keep interest rates high to fight inflation, investors usually move their money toward assets that pay regular interest instead. This shift away from non-yielding metals is what typically causes prices to drop during periods of strong monetary tightening.