Gold Slips in Global Markets After RBI Hikes Repo Rate to 5.50%

Mumbai | 7 October 2026 

Global gold prices came under pressure on Wednesday after the Reserve Bank of India raised its repo rate the same day by 25 basis points (0.25 percentage points) to 5.50% from 5.25%. The repo rate is the interest rate at which the RBI lends money to banks. This is the RBI’s first rate hike since February 2023. 

How Are Gold Prices Moving After the RBI Rate Hike? 

Spot gold, the price of gold for immediate delivery, traded at $4,119.02 an ounce at 3:11 pm on Wednesday, down $45.53 or 1.09%. 

On the Multi Commodity Exchange (MCX), gold for December delivery fell ₹750 or 0.5% to ₹1,49,370 at 3:05 pm. 

Retail gold rates in India, however, were 0.37% higher on the day. 

Why Are Gold Prices Under Pressure? 

Gold gave back gains from the previous session as oil prices rebounded on continuing risks to Middle East supply. Iran stepped up attacks on tankers in the Strait of Hormuz, while Saudi forces continued to clash with the Houthis. Higher oil prices keep inflation and rate hike concerns in focus. 

US Treasury yields also stayed near multi-decade highs. US job growth in September came in weaker than expected, and payrolls for the previous two months were revised down. 

What Did the RBI Announce? 

The RBI changed its policy stance to “calibrated tightening”. Four of the six members of the Monetary Policy Committee (MPC), the panel that sets the repo rate, voted in favour of this stance. The RBI also indicated that rate cuts are off the table in the near term, with future decisions depending on economic conditions. 

What Is the RBI’s Inflation Outlook? 

Headline inflation has stayed above the RBI’s 4% target for three months in a row, reaching 4.82% in August. The RBI has also raised its inflation projections for the financial year 2026-27 (FY27) and the quarters ahead. 

Core inflation leaves out food and fuel prices. 

How Does a Rate Hike Affect Gold in India? 

Gold does not pay interest. When interest rates and bond yields rise, investors give up more income by holding gold instead of interest-paying assets. India’s 10-year government bond yield is near 7.2%. 

The rupee has fallen around 6% in 2026, which has added to gold returns for Indian investors. Domestic gold prices depend on both international gold prices and the rupee. 

Outlook 

Investors are awaiting the minutes of the US Federal Reserve’s 15 and 16 September meeting, at which it raised rates. The minutes may offer clues on whether policymakers favour further hikes. The Fed’s dot plot, a chart of each policymaker’s interest rate projection, currently indicates one more rate hike. 

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