Gold & Silver Prices Hit 7-Month Lows: Why are Gold & Silver Falling?
Gold slipped below the $4,000 mark for the first time since November, while silver dropped below $60 an ounce. Here's why precious metal prices are falling and how the decline is impacting gold-linked stocks.
Gold and silver have dropped to 7 month lows as a stronger US dollar and expectations of higher US interest rates hurt demand for precious metals. The correction has also weighed on gold-linked stocks, including Hindustan Zinc, Manappuram Finance and IIFL Finance.
Gold and silver prices remained under pressure on 25 June, slipping to their lowest levels in nearly 7 months. Gold fell below the key $4,000 an ounce mark for the first time since November, while silver also dropped below $60 an ounce. The sharp correction weighed on shares of companies linked to precious metals and gold loans, including Hindustan Zinc, Manappuram Finance and IIFL Finance.
So, why are gold and silver falling despite global uncertainty? Here's a closer look.
Why are Gold And Silver Prices Falling?
The biggest reason is the strengthening US dollar and growing expectations that the US Federal Reserve could keep interest rates higher or even raise them later this year.
Gold and silver do not generate regular income like bonds or fixed deposits. As interest rates rise, investors tend to shift towards interest-bearing assets, reducing the appeal of precious metals.
A stronger US dollar is adding to the pressure because gold is priced in dollars. When the dollar appreciates, buying gold becomes more expensive for overseas investors, affecting demand.
How Much Have Gold And Silver Prices Fallen?
The correction has been effective over the past week. According to international market data:
|
Metal |
Latest Price |
Recent Movement |
|---|---|---|
|
Gold |
$3,988.60 per ounce |
Down nearly 4% on the day and around 8% over the past week |
|
Silver |
$58.44 per ounce |
Down nearly 6% on the day and around 16% over the past week |
The latest correction has pushed gold more than 20% below its January 2026 record high, a level that many market participants consider the beginning of a bear market.
Which Stocks Came Under Pressure?
The decline in bullion prices also dragged shares of companies linked to the precious metals ecosystem.
|
Company |
Share Price Movement |
|---|---|
|
Hindustan Zinc |
Down 3.5% to ₹523.20 |
|
Manappuram Finance |
Down 1.5% to ₹313.45 |
|
IIFL Finance |
Down 1% to ₹519.80 |
As of 25 June 2026, 10.55 AM
Why Do Gold Loan Stocks Fall When Gold Prices Decline?
Gold loan companies lend money against pledged gold jewellery. When gold prices fall sharply, the value of that collateral also declines. Although lenders maintain safety buffers, a prolonged fall in gold prices can affect investor sentiment and raise concerns over loan recoveries.
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What Is Federal Reserve Signalling?
At its latest policy meeting, the Federal Reserve kept interest rates unchanged, saying the US economy continues to expand despite elevated uncertainty related to the Iran conflict.
However, the market is focusing on future policy.
Out of 18 Federal Reserve officials, 9 now expect at least one interest rate hike this year.
Federal Reserve Chairman Kevin Warsh also maintained a hawkish tone, reinforcing expectations that borrowing costs could remain higher for longer.
Gold Was Rallying Earlier. What Changed?
Just a few months ago, both gold and silver were trading at record highs.
|
Metal |
January Record High |
Current Price |
|---|---|---|
|
Gold |
Around $5,600 per ounce |
Around $3,988.60 |
|
Silver |
Around $121 per ounce |
Around $58.44 |
The earlier rally was driven by expectations of interest rate cuts, tariff-related uncertainty, geopolitical tensions and strong demand from central banks and technology-related industries.
However, sentiment changed after Kevin Warsh was appointed to lead the Federal Reserve, as investors began expecting fewer rate cuts and a more restrictive monetary policy.
Final Words
The latest correction shows that monetary policy expectations are currently having a bigger impact on gold than geopolitical tensions.
For Indian investors, the decline has already affected stocks such as Hindustan Zinc, Manappuram Finance and IIFL Finance. Going forward, the direction of gold and silver prices will largely depend on the US Federal Reserve's interest-rate decisions and the movement of the US dollar.