Precious metals experienced a sharp retreat on August 31, 2026, driven by an increasingly hawkish Federal Reserve and surging crude oil prices. In domestic markets, MCX gold plunged by Rs 2,200 (nearly 1.5%) to trade near Rs 1.54 lakh, while MCX silver dropped over Rs 2,400 (around 1%) to hit an intraday low below Rs 2.33 lakh per kilogram. This domestic downturn mirrored steep sell-offs across global spot markets, where gold dropped more than 1% to hover around $4,400 per ounce and silver slipped below the $66 per ounce mark.

Key Drivers Behind the Sell-Off

• Hawkish Fed Signals: Federal Reserve Chair Kevin Warsh signaled persistent inflation concerns during the Jackson Hole summit, emphasizing that financial conditions remain insufficiently restrictive to reach the 2% inflation target.
• Rising Rate Hike Odds: Traders are now pricing in a 57% probability of a 25-basis-point rate hike in September, up from roughly 40% last week.
• Energy & Geopolitical Pressures: US strikes on Iranian rocket launchers near the Strait of Hormuz lifted crude prices, compounding pressure on non-yielding bullion.

Despite the sharp end-of-month pullback, gold remains positioned to close August with a gain of more than 10%, supported by broad-based currency debasement trades.