- August 21, 2026
Gold Reclaims Rs 1.60 Lakh, Silver Nears Rs 2.50 Lakh: Why Are Bullion Prices Rising? Know Key Reasons
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The rally comes as international gold prices climbed to a near three-month high, putting the precious metal on track for its third consecutive weekly gain.
The near-term direction of bullion prices is likely to depend heavily on movements in the US dollar and Treasury yields, along with incoming US economic data and signals from the Federal Reserve.
Gold and silver prices extended their gains in the domestic futures market on Friday, tracking a sharp rise in international bullion prices amid a weaker US dollar, changing expectations around US interest rates and continued safe-haven demand.
On the Multi Commodity Exchange (MCX), gold futures were trading at around Rs 1,61,196 per 10 grams as of 3:10 pm, up Rs 1,771, or 1.11%, from the previous close. Silver futures gained Rs 3,128, or 1.29%, to trade near Rs 2,46,371 per kg.
The rally comes as international gold prices climbed to a near three-month high, putting the precious metal on track for its third consecutive weekly gain.
In January this year, gold had hit its record level of around Rs 1.8 lakh per 10 gm and silver had surged to Rs 4.25 lakh per kg in India.
Why are gold and silver prices rising?
A combination of a weaker US dollar, movements in US Treasury yields, safe-haven demand and expectations around US monetary policy has supported bullion prices.
Pinky Yadav, commodity fundamental analyst at Choice Broking, said MCX bullion prices opened higher following gains in global COMEX prices. “MCX bullion prices opened higher, following global COMEX gains as US Treasury bond buybacks and surging national debt fueled market volatility,” Yadav said.
She added that rising oil prices amid impending US sanctions on Iran have also increased concerns over inflation, while a weaker dollar has provided additional support to precious metals.
Weaker dollar supports bullion prices
One of the key factors behind the latest rise in gold and silver prices is the weakness in the US dollar. The dollar index was hovering around 98.8 and was headed for a weekly decline. Since gold and silver are priced internationally in dollars, a weaker greenback makes bullion relatively cheaper for buyers holding other currencies. This can support demand and push prices higher.
“We’ve seen the dollar weakening and that has supported not just gold but all precious metals, along with a big change in yields,” said Brian Lan, managing director of GoldSilver Central, according to Reuters.
US Treasury bond buybacks add to market uncertainty
US Treasury debt management has also emerged as an important factor for financial markets. US Treasury Secretary Scott Bessent indicated that the government could further increase its repurchases of Treasury securities. The Treasury had earlier announced that it would double the size of buybacks of longer-dated securities over the next quarter to at least $4 billion per operation.
These developments have added to market volatility and triggered fresh attention on US yields, interest rates and the broader debt situation.
According to Reuters, Christopher Wong, precious metals strategist at OCBC, said the focus would now be on whether the recent move can continue, with upcoming US economic data and the Jackson Hole Symposium scheduled for August 27-29 likely to influence the next direction of yields and the dollar.
Fed rate outlook remains crucial for gold
Expectations around US Federal Reserve interest rates remain another important driver for bullion prices. Traders are currently pricing in a 67% probability that the Fed will leave interest rates unchanged next month, while the probability of a rate hike stands at 33%, according to the CME FedWatch Tool.
Gold does not generate interest or dividends. Therefore, higher interest rates generally reduce the appeal of holding bullion because investors can earn better returns from interest-bearing assets.
However, uncertainty over the direction of monetary policy, combined with movements in bond yields and the dollar, can increase demand for gold as a safe-haven asset.
Geopolitical tensions boost safe-haven demand
Geopolitical developments are also supporting precious metals. US Treasury Secretary Scott Bessent said the United States would impose the “toughest sanctions in history” on Iran. Concerns over the impact of sanctions on oil supplies have pushed crude prices higher, adding to inflation worries.
Such geopolitical and economic uncertainty often encourages investors to move money towards traditional safe-haven assets such as gold.
Yadav said investors have also shifted capital towards safe-haven metals, supported by robust investment demand and continued central bank purchases, particularly from China.
Central bank buying remains a key support
Strong central bank demand has become an important structural support for gold prices in recent years. Central banks have continued to add gold to their reserves as they look to diversify their holdings.
Yadav also pointed to inflows into global gold ETFs in July, along with continued central bank buying, as factors supporting the bullion market. This provides gold with an additional source of demand beyond jewellery and retail investment.
Silver gains alongside gold
Silver has also participated in the broader precious metals rally. International spot silver prices gained 1.8% to around $69.31 per ounce, while platinum rose 2.6% to $1,875.75 and palladium advanced 1.7% to $1,356.59.
Silver can benefit from the same macroeconomic factors that support gold, including a weaker dollar and lower or changing interest-rate expectations. At the same time, silver also has significant industrial demand, which can influence its price independently of gold.
The latest rally has taken MCX silver close to the psychologically important Rs 2.50 lakh per kg level.
What lies ahead for gold and silver prices?
The near-term direction of bullion prices is likely to depend heavily on movements in the US dollar and Treasury yields, along with incoming US economic data and signals from the Federal Reserve.
The Jackson Hole Symposium will also be closely watched by investors for clues about the US central bank’s monetary policy outlook.
For Indian investors, domestic prices will additionally depend on the rupee-dollar exchange rate. A weaker rupee can make internationally priced commodities such as gold and silver more expensive in India, even when global prices remain unchanged.
The recent rally has already started to affect physical demand in India, with higher prices discouraging some retail buyers. In China, however, demand has remained relatively steady.
With gold back above Rs 1.60 lakh per 10 grams and silver approaching Rs 2.50 lakh per kg on MCX, investors will now watch whether the global factors supporting bullion can sustain the rally or trigger another round of profit-taking at elevated levels.
Key Questions Answered
Ask News18The current reporting does not explicitly state whether gold and silver prices will continue to rise in the coming months. However, one forecast for the remainder of 2026 estimated gold prices in India to range between ₹1.50 lakh and ₹1.80 lakh per 10 grams.
Ask News18About the Author
Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to personal finance, markets, economy and companies. Having over a decade of experience in financial journalis…Read More
August 21, 2026, 15:19 IST
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