Gold & Silver Rates Crash By 3-4%; Rate Cut, Hike, Or Pause, What Fed Outcome Will Impact Precious Metals Most

Gold rates and silver rates in India crashed by 2% to 3% on March 17th, due to weak global cues. Spot gold price has dropped below $4,900 mark and spot silver crashed even below $77 per ounce zone. The reason? The upcoming US Federal Reserves policy decision that is scheduled on March 18th. Investors hope for a rate cut has dulled due to Strait of Hormuz shut down which has put inflationary risk globally. Crude oil prices are up strongly and dollar strengthened as well. That being said, which Fed decision will impact precious metals ahead?

FOMC Meeting Today:

Fed will declare their second monetary policy of 2026 in the late hours of March 18. In the previous policy, Fed had kept its key interest rates unchanged to 3.25% to 3.75% as inflation remained somewhat elevated.

What Will Be Fed Decision Today?

Analysts at banking services provider, ING, in their report said, "The outlook for Federal Reserve policy changes has been upended by events in the Middle East. Financial markets have swung from anticipating two 25bp rate cuts this year to now pricing in barely one. Markets are solidly backing a no-change outcome on Wednesday, 18 March and we agree."

The analysts pointed out that the military action in Iran and the resulting reluctance of shipping to navigate the Strait of Hormuz has led energy prices to spike higher.

Although, US is not dependent on crude oil from Gulf as it is self-sufficient in natural gas, prices of oil have risen like wildfire globally.

This is why US retail gasoline prices are up above $3.60 per gallon with the real prospect of the national average pushing imminently towards $4.25/gallon. Analysts said, "This will put up supply and distribution costs, with airline fares also likely to push higher."

"The longer that the disruption lasts, the greater the chance it lifts prices in other sectors, including fertiliser, food prices and the cost of plastics. In consequence, we are now looking at inflation moving towards 3.5% by the summer, well above the 2% target," analysts at ING added.

Given this situation, ING's note said, "we will be closely watching the Fed's new forecasts."

In December, the Fed were pencilling in one rate cut in 2026 with one further 25bp cut in 2027. Analysts added, "There is huge uncertainty over how long and how intense the conflict and the disruption will be, so the Fed will have little conviction in their forecasts."

"Fed Chair Powell will be certain to underline the challenges in setting policy in this situation at the press conference. Nonetheless, we suspect they will trim growth marginally, push up their inflation forecast and then delay the 2026 rate cut until 2027," they added.

Hence, market is expecting a delay in rate cut. ING's prediction of rate cut has been pushed to 2027.

Spot Gold Price + Spot Silver Price:

Spot gold plunged by nearly 3% to trade around $4,858 per ounce, which is its lowest level in a month. Investors are predicting a hawkish policy from Fed.

Meanwhile, spot silver plunged nearly 4% to trade around $76.2 per ounce.

"The recent volatility in the precious metals market is largely attributed to investor sentiment ahead of the US Federal Reserve's upcoming policy decision, which has created a cautious atmosphere especially amid rising inflation concerns linked to high oil prices stemming from geopolitical tensions in the Middle East," said Gaurav Garg, Research Analyst at Lemonn Markets Desk.

MCX Gold Price + MCX Silver Price:

MCX gold price with April 2026 expiry, dropped by 2.4% to end at Rs 1,52,300 per 10 grams on March 18 after hitting an intraday low of Rs 1,51,675 per 10 grams.

Meanwhile, MCX silver price with May 2026 expiry, dropped by Rs 3% to close at Rs 2,45,665 per 1Kg after hitting an intraday low of Rs 2,42,803 per 1Kg.

Gold & Silver Prices Outlook After Fed Policy?

In a note, Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities said, elevated crude prices and ongoing geopolitical tensions, particularly the US-Iran conflict, are adding to inflation concerns, which may push the Fed to maintain a higher-for-longer interest rate stance."

"With the US Fed policy decision due later today, markets are positioning cautiously, as any hawkish tone-driven by inflation risks from rising energy prices-could further weigh on gold in the short term. Higher interest rates typically reduce gold's appeal as a non-yielding asset, keeping upside capped," he said.

He added, "On the domestic front, MCX gold continues to show weakness on charts, with strong resistance near ₹158000, while immediate support is seen in the ₹152000-150000 zone. Price action is expected to remain volatile, and the Fed outcome will act as the next major trigger as markets reassess the trajectory of inflation, rates, and dollar strength."

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