New Delhi

Silver futures plunged by Rs 8,817 to Rs 2.42 lakh per kg on Thursday, tracking weak global trends after the US Federal Reserve's latest policy signals strengthened the dollar and dampened investors' appetite for precious metals.

On the Multi Commodity Exchange, the white metal for July delivery declined by Rs 8,817, or 3.5 per cent, to Rs 2,42,990 per kilogram in a business turnover of 11,188 lots.

Analysts said the decline came after the US central bank kept interest rates unchanged, but indicated that the fight against inflation remains far from over, prompting traders to reassess expectations for future monetary policy easing.

Silver prices in the domestic markets saw a sharper decline of more than 3 per cent on Thursday, Gaurav Garg, Research Analyst at Lemonn Markets Desk, said.

"The downturn in precious metals can be attributed to a strengthening US dollar, as traders remain wary following a hawkish June Federal Reserve policy decision under new Chair Kevin Warsh," he said.

In the international markets, Comex silver futures for the July contract declined USD 2.36, or 3.34 per cent, to USD 68.40 per ounce in New York.

The Federal Reserve on Wednesday unanimously voted to maintain its benchmark interest rate in the 3.5-3.75 per cent range. However, nine of 18 members of the Federal Open Markets Committee projected that they see a rate hike this year.

"Comex silver prices remained under pressure in the overseas trade on Thursday after the Federal Reserve kept interest rates unchanged, but signalled growing support for additional rate hikes, while maintaining its focus on bringing inflation back to target," Pinky Yadav, Commodity Fundamental Analyst at Choice Broking, said.

According to analysts, prospects for higher-for-longer interest rates tend to weigh on precious metals by boosting bond yields and the US dollar.

"The division among policymakers, with half still anticipating at least one more rate hike this year, along with elevated inflation forecasts and slower GDP growth, reflects the Fed's ongoing focus on controlling price pressures even if it moderates economic growth," Rajesh Palviya, Head of Research, Axis Direct, said.

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He added that higher yields and a firmer dollar could continue to exert pressure on bullion prices in the near term.