Gold prices lost ground after Heraeus said a divided Federal Reserve is unlikely to deliver a gold-supportive rate cut in 2026, while silver demand is drawing support from rising EU electric vehicle sales even as ETF investors continue to pull back. For Indian investors, that mix matters because U.S. rate expectations shape the dollar and global bullion prices, while silver’s industrial demand can influence domestic precious metals allocations alongside INR moves.
Why is the gold price under pressure despite steady inflation concerns?
Gold is under pressure because the Federal Reserve signaled no urgency to cut rates, even with inflation running above target. According to precious metals analysts at Heraeus, the latest Fed meeting showed policymakers see the economy as strong enough to avoid a cut and inflation as not severe enough to require a hike.Heraeus said the Federal Reserve kept the headline rate unchanged. The analysts added that Fed Chair Jerome Powell’s press conference offered more clarity on how he views the current monetary policy backdrop.
What did Jerome Powell say about inflation and rates?
Powell said the Federal Reserve expected prices to rise because of tariffs and the closure of the Strait of Hormuz, but he did not see a need to raise interest rates in response. Heraeus highlighted that the Fed statement said the personal consumption expenditures price index was running at 3.5% year-on-year, while also noting that “most measures of longer-term expectations remain consistent with our 2 percent inflation goal.”Powell also said he believes the neutral rate is between 3% and 4%, the level that balances the Federal Reserve’s dual mandate. He implied that this neutral rate may be slightly below the current policy rate.
What does a divided Fed mean for gold in 2026?
A divided Fed reduces the chance of a clear, gold-bullish policy pivot. Heraeus said three FOMC members dissented on the wording of the statement and preferred relatively more hawkish language, while another member voted for an immediate rate cut.That split suggests the Federal Reserve does not yet have consensus for easier policy. For gold, that matters because lower U.S. rates typically weaken the dollar and reduce the opportunity cost of holding non-yielding bullion such as XAUUSD.
Why are Indian investors watching the Fed so closely?
Indian investors track the Federal Reserve because U.S. rate signals often move the dollar, Treasury yields, and global gold prices at the same time. If the Fed delays rate cuts, bullion can face short-term pressure in dollar terms, though rupee weakness can partly cushion domestic gold prices in India.That means MCX gold and local jewellery rates may not fall in lockstep with international spot prices. For Indian buyers, the INR-USD exchange rate remains a critical variable alongside global troy ounce pricing.
What did Heraeus say about Powell’s future and Fed leadership?
Heraeus said Powell avoided making forecasts about the future and suggested this was likely to be his last FOMC meeting as chairman. The analysts added that this outcome has become more likely after the criminal investigation against Powell was dropped and Kevin Warsh passed confirmation by the Senate Banking Committee.According to Heraeus, that clears a path for Warsh to be confirmed as the next Federal Reserve chairman before the Fed’s June meeting. A leadership transition at the Federal Reserve could become a major driver for gold price expectations if investors start repricing the policy outlook.
How is gold supply shaping the market after Newmont’s Q1 results?
Gold supply remains in focus after Newmont reported weaker first-quarter output, even though its financial results stayed strong due to higher bullion prices. Heraeus said Newmont, the world’s largest gold miner, produced about 1.3 million ounces in the first quarter, down around 13% year-on-year from 1.5 million ounces in Q1’25.Why did Newmont’s gold production fall?
The production decline came mainly from site interruptions across several operations and the divestment of the Musselwhite and Cripple Creek & Victor mines last year. Even so, Newmont said it remains on track to meet full-year production guidance of around 5.3 million ounces.How strong were Newmont’s financial results?
Newmont posted strong earnings because higher gold prices supported margins and cash generation. Heraeus said the miner’s net income rose to $3.3 billion and free cash flow reached a record $3.1 billion.For Indian investors, that is a reminder that elevated gold prices can still support miners even when mine output softens. It also shows why supply constraints can provide a medium-term floor for bullion.
What are gold ETF flows signaling for the gold price outlook?
Gold ETF flows show some cooling in investor enthusiasm, but not a collapse in demand. Heraeus said holdings in U.S.-based gold ETFs fell 2.1% to 98.8 million ounces from their peak on 27 February.That level is still broadly flat versus the start of the year, when holdings stood at 98.9 million ounces. Heraeus said gold ETF holdings have closely mirrored the gold price so far this year.
How have ETF holdings tracked gold prices in 2026?
Heraeus identified three local peaks in ETF holdings in late January, late February, and mid-April, along with a low in late March. The analysts said that low slightly lagged gold’s lowest daily close on 26 March.This pattern suggests investors have been reacting to price momentum rather than building aggressive new strategic positions. For Indian investors, that means global investment demand is steady but not yet strong enough to overpower the Fed-driven macro headwinds.
What happened to gold prices on Monday?
Gold prices fell sharply on Monday as the market reacted to the latest macro signals and risk sentiment. Gold dropped to an intraday low of $4,526.09 per ounce earlier on Monday morning.It later traded at $4,564.49 per ounce, down 1.07% on the session. Spot gold was last quoted at $4,692.42 per ounce, down 0.37% on the day.
For Indian market participants, sharp moves in international spot gold often feed into opening trends in MCX futures and local bullion markets. The final domestic move, however, also depends on rupee volatility and import-cost dynamics.
Why is silver demand improving even as silver ETF holdings fall?
Silver demand is improving because electric vehicle adoption and charging infrastructure buildout in Europe are increasing industrial use, even as ETF investors continue to reduce exposure. Heraeus said silver ETF holdings have been on a persistent downtrend through 2026.The analysts said holdings in silver ETFs fell 8.2% to 793.2 million ounces from their peak on 1 January. At the start of the year, silver ETF holdings stood at 863.6 million ounces.
Are silver ETF outflows starting to slow?
Yes, silver ETF outflows appear to be stabilizing. Heraeus said the downtrend has included only minor relief rallies after silver price run-ups, but the decline seems to be levelling off since silver hit its lowest close of the year on 26 March.That could matter for sentiment if industrial demand stays firm and investment outflows slow further. For Indian investors, silver often offers a higher-volatility alternative to gold, especially when industrial demand improves.
How are EU EV sales supporting silver demand?
EU electric vehicle growth is supporting silver demand because EVs and charging systems use significantly more silver than internal combustion engine vehicles. Heraeus said battery electric vehicles (BEVs) accounted for 19.4% of new EU vehicle registrations in Q1’26, or roughly 547,000 cars.That share was up 4.2 percentage points from Q1’25. Heraeus also said hybrid electric vehicles made up 38.6% of new registrations, while plug-in hybrid vehicles accounted for 9.5%.
At the same time, the share of new registrations for ICE cars fell to 30.3%, down from 38.2% a year earlier. That shift points to a larger installed base of vehicles and infrastructure that consume silver.
How much silver do EVs and chargers use?
Heraeus said EVs use roughly 75% more silver than ICE vehicles. The analysts estimated that EVs require between 1 and 2 ounces of silver per vehicle.Charging infrastructure adds another demand channel. According to Heraeus, a fast DC charging station can require 50 ounces of silver, depending on its power rating and the number of charging ports.
For Indian investors, this reinforces silver’s dual role as both a precious metal and an industrial metal. That makes silver more sensitive than gold to clean-energy, auto, and infrastructure trends.
What happened to silver prices and what should Indian investors watch next?
Silver prices fell alongside gold on Monday, but the bigger story remains the tug-of-war between ETF outflows and industrial demand growth. Silver touched a low of $72.204 as gold also bottomed.Spot silver was last at $73.794 per ounce, down 2.07% on the daily chart. Going forward, Indian investors should watch three drivers closely: whether the Federal Reserve stays sidelined on rate cuts in 2026, whether gold and silver ETF flows stabilize after the 26 March lows, and whether EV-led silver demand in Europe continues to strengthen. If the dollar stays firm, gold may struggle to rally sharply, but any shift in Fed leadership, yields, or INR weakness could quickly change the outlook for domestic bullion prices.
