Gold Silver Price Crash: Can Gold Fall Below ₹1.40 Lakh? What Could Happen to Silver After the Latest Sell-Off
Gold and silver prices came under heavy selling pressure on August 31, 2026, as expectations of a US Federal Reserve rate hike increased following hawkish comments from Fed Chair Kevin Warsh. MCX gold fell below ₹1.54 lakh per 10 grams, while silver slipped towards ₹2.39 lakh per kg during the session.
The sharp correction has raised a bigger question among Indian investors: Can gold eventually fall below ₹1.40 lakh per 10 grams, and how much further could silver decline?
At present, such a fall is a possible downside scenario, not a confirmed forecast. The next direction will depend heavily on US interest-rate expectations, the dollar, bond yields, inflation data and global geopolitical developments.
Gold Price Crash: What Happened on August 31?
MCX October gold futures fell as much as 1.68% during Monday's session, touching an intraday low of around ₹1,53,640 per 10 grams. At one point, the contract was down more than ₹2,200 from the previous session.
Silver also weakened sharply. MCX silver fell around 1.5% at its intraday low, with prices moving below the ₹2.40 lakh mark per kg.
The correction followed a broader decline in international bullion markets. Spot gold slipped to around $4,419 per ounce, while silver also declined.
However, the decline should be viewed in context. Reuters reported that gold was still heading for a strong monthly gain of around 9.6%, while silver remained up roughly 15% for August despite the latest weakness.
That means the current move is a significant correction, but it does not automatically mean that the long-term bull trend has ended.
Why Are Gold and Silver Falling?
1. Fed Rate Hike Expectations Have Increased
The biggest immediate trigger is the US Federal Reserve.
Fed Chair Kevin Warsh's recent comments indicated that inflation remains a concern and that additional policy action could be necessary if inflation stays above the Fed's 2% target.
As a result, markets have increased the probability of a US rate hike in September.
Higher interest rates generally create a difficult environment for gold because gold does not generate interest income. When US Treasury yields rise, investors can become more attracted to interest-bearing assets.
2. Stronger Dollar Is Another Headwind
Gold is globally priced in US dollars. When the dollar strengthens, gold can become relatively more expensive for buyers using other currencies.
A stronger dollar can therefore add pressure to international gold prices and, indirectly, Indian prices.
For Indian buyers, however, currency movements are important too. A weaker rupee against the dollar can cushion part of an international gold decline.
3. Oil Prices Are Adding to Inflation Concerns
The latest geopolitical developments have pushed crude oil prices higher. Reuters reported that oil prices jumped following a US strike involving Iran-related tensions, increasing concerns about inflation.
This creates a complicated situation for gold.
Higher inflation can theoretically support gold as an inflation hedge, but if higher oil prices force central banks to maintain or increase interest rates, the resulting rise in yields can become negative for bullion.
Can Gold Fall Below ₹1.40 Lakh?
This is the key question behind the current market discussion.
MCX gold was trading around ₹1.54 lakh per 10 grams after the latest sell-off.
A decline to ₹1.40 lakh would therefore require another substantial correction from current levels.
There is currently no reliable evidence that gold is definitely heading to ₹1.40 lakh. Instead, technical levels indicate that traders are watching the ₹1.53–₹1.55 lakh region closely.
According to market commentary cited by NDTV Profit, ₹1,53,500 was identified as an immediate support area, while ₹1,54,600 was resistance.
Goodreturns' technical analysis placed further support around ₹1,53,300–₹1,52,600, with a break below ₹1,55,500 potentially extending the correction.
Therefore, ₹1.40 lakh should be treated as a deeper downside scenario rather than the base case at this point.
For such a move to become more plausible, investors would likely need to see a combination of stronger US economic data, persistently high inflation, substantially higher bond yields, a stronger dollar and a prolonged period of restrictive Fed policy.
How Much Could Silver Fall?
Silver is generally more volatile than gold because it has both monetary and industrial demand.
On August 31, MCX silver moved sharply lower, with immediate support around ₹2.39 lakh according to market commentary.
Goodreturns cited technical support around ₹2.35–₹2.36 lakh, followed by the ₹2.32 lakh region. A sustained move below ₹2.30 lakh could deepen the correction.
This gives investors several levels to monitor:
- ₹2.39 lakh: immediate support area
- ₹2.35–₹2.36 lakh: next important support
- ₹2.32 lakh: deeper support
- Below ₹2.30 lakh: could indicate stronger corrective pressure
These are technical reference points, not guaranteed future prices.
What Could Trigger Another Gold and Silver Sell-Off?
The biggest potential catalyst is the US Federal Reserve.
If upcoming US inflation and employment data strengthen the case for higher interest rates, gold and silver could remain under pressure.
The market will therefore closely watch:
- US inflation data
- US employment numbers
- Federal Reserve policy signals
- US Treasury yields
- Dollar index movements
- Crude oil prices
- Geopolitical developments
- ETF and institutional flows into precious metals
The opposite scenario is also possible. If US economic data weakens and expectations of rate hikes decline, bullion could regain momentum.
Gold vs Silver: Which Is More Vulnerable?
Silver generally carries greater short-term volatility.
Gold has a larger role as a monetary and safe-haven asset, while silver is also heavily connected to industrial demand. That makes silver capable of outperforming gold during strong commodity rallies—but also falling faster during sharp corrections.
The recent numbers illustrate that volatility. Despite the latest fall, silver remained up around 15% for August, according to Reuters.
Therefore, investors should not assume that one or two weak sessions automatically signal a permanent collapse in either metal.
What Should Investors Watch Now?
The most important point is to avoid treating a headline such as “gold will crash to ₹1.40 lakh” as a certainty.
The market is currently responding to changing expectations around US monetary policy. If those expectations reverse, gold and silver can recover quickly. If the Fed becomes more hawkish and yields remain elevated, the correction could become deeper.
For physical gold buyers, a decline can create opportunities to accumulate gradually rather than trying to identify the exact bottom. Investors in ETFs, futures or other market-linked products need to consider volatility and their own risk tolerance.
Bottom Line
Gold and silver have entered a period of heightened volatility after the latest hawkish signals from the US Federal Reserve. MCX gold has fallen towards ₹1.54 lakh, while silver has slipped below the ₹2.40 lakh zone.
A fall in gold towards ₹1.40 lakh cannot be ruled out as a long-term downside scenario, but there is currently no basis to present it as a confirmed target. The immediate focus should remain on the ₹1.53–₹1.55 lakh support region for gold and ₹2.35–₹2.39 lakh for silver.
The next major driver will likely be US economic data and how those numbers change expectations for Federal Reserve policy.
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This article is for informational and educational purposes only and should not be considered investment advice.