Weekly Roundup: Gold Falls Over $100 From Weekly Peak, Silver Slumps ₹18,000/kg in Late-Week Sell-Off

Gold and silver markets ended a highly volatile week on a weak note, with both precious metals witnessing sharp declines on Friday as investors booked profits and reassessed the outlook for US interest rates following Federal Reserve Chair Kevin Warsh’s remarks at the Jackson Hole symposium.

International spot gold fell to $4,567.23 per ounce on Friday, its lowest level since August 20, after touching a more than three-month high of $4,696.18 on Tuesday. This represents a decline of about $129 per ounce from the weekly peak. Gold was down around 2.9% for the week. US gold futures settled 2.9% lower at $4,529.90 per ounce.

Silver also came under heavy selling pressure. International spot silver fell 3.5% to $66.81 per ounce on Friday, while front-month silver futures ended the week at around $66.995 per ounce.

Domestic gold and silver prices

In India, benchmark IBJA 999-purity gold stood at ₹1,59,578 per 10 grams in the PM session on August 28, compared with ₹1,62,041 on August 25.

Retail prices were higher in some markets. On August 25, 24-karat gold in Delhi was quoted at ₹1,62,970 per 10 grams, while 22-karat gold was ₹1,49,389 per 10 grams.

Silver witnessed a much sharper domestic correction. Retail silver prices fell from around ₹2,60,000 per kg to ₹2,42,000 per kg, representing a decline of ₹18,000 per kg.

However, the IBJA 999-silver benchmark closed at ₹2,43,892 per kg on August 28, compared with ₹2,41,848 on August 25, highlighting the difference between retail market quotations and benchmark bullion prices.

Key factors driving the volatility

1. Jackson Hole speech changes rate-hike expectations:
The biggest trigger for Friday's sell-off was Federal Reserve Chair Kevin Warsh's speech at Jackson Hole, in which he indicated that the Fed could need to act if underlying inflation does not move convincingly towards its 2% target. His comments prompted traders to increase the probability of a September rate hike to 58%, from 36% before the speech, according to the CME FedWatch tool.

2. Profit-booking after a strong rally:
Gold had climbed to $4,696.18 per ounce on Tuesday, its highest level in more than three months. The sharp gains encouraged investors to lock in profits, adding to the selling pressure once prices began reversing.

3. Stronger dollar and higher yields:
Warsh's comments pushed short-term Treasury yields higher and strengthened the US dollar. A stronger dollar makes bullion more expensive for buyers using other currencies, while higher yields reduce the relative appeal of non-yielding assets such as gold.

4. Sharp correction in domestic silver:
Silver had remained near elevated levels through the week, with retail prices around ₹2.60 lakh per kg before Friday's correction. The subsequent ₹18,000-per-kg fall reflected aggressive profit-booking and the broader global sell-off in precious metals.

5. Rupee movement cushions domestic gold:
Currency movements also influenced Indian prices. Analysts noted that rupee weakness provided some support to MCX gold, limiting the extent of the decline in domestic markets compared with international prices.