Gold Silver Price Today: Precious metals typically serve as safe-haven assets during times of geopolitical tension. Consequently, yesterday’s decline in gold and silver prices surprised investors.
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Gold and Silver: Gold prices typically rise during global uncertainty and war, but last Monday’s price drop surprised investors. On the first trading day of the week, both gold and silver prices fell on the Multi Commodity Exchange (MCX). Yesterday, gold prices fell by ₹2,690-₹2,900 per 10 grams. Gold also fell by 1.83% on the MCX, trading at ₹1,55,566.
Silver saw an even larger decline than gold. Yesterday, its price fell by ₹4,232-₹5,000 per kg. Silver fell by approximately 2.11% on the day, trading in the range of ₹2.53-₹2.55 lakh per kg. This clearly indicates that both gold and silver started at lower levels and are likely to remain under pressure throughout the trading session.
Gold Prices Fall in War Situation
Precious metals like gold and silver typically rise in price during geopolitical tensions, as demand for them increases as safe-haven assets. Consequently, the decline in gold and silver prices amid the ongoing war between Iran and the United States is truly surprising.
Gaurav Garg, research analyst at Lemonn Markets Desk, believes that global factors play a significant role in the current price fluctuations. He argues that this decline is primarily linked to rising crude oil prices. He says, “The main reason for the decline in precious metal prices is rising crude oil prices. Crude oil prices have risen to $100.15 per barrel, raising fears of rising inflation and dampening expectations of an interest rate cut by the US Federal Reserve.”
Why did the price of gold suddenly fall?
Indeed, rising crude oil prices increase the fear of global inflation, as they increase the cost of everything from transportation to logistics, agriculture, and raw materials. To control this inflation, the US Federal Reserve keeps interest rates high. This reduces the flow of money into the market, as rising interest rates make borrowing from banks more expensive. Consequently, people reduce their purchases and investments. When there are fewer buyers in the market, demand will automatically decrease. This reduced demand will force shopkeepers to reduce or stabilize prices. This will gradually mitigate the impact of inflation.
Whenever the Federal Reserve keeps interest rates high, the US dollar strengthens. Since gold is purchased in dollars in the international market, the dollar’s price decreases the demand for gold, causing prices to fall.
This is also a reason.
Furthermore, whenever crude oil prices suddenly rise, the stock and commodity markets become volatile. Investors sell gold to raise cash to cover other losses or meet margin calls. This was also a major reason for yesterday’s price drop.
What should investors do?
Market experts say investors should avoid making panicked decisions during such volatile times. Short-term price declines in commodities are common, especially when global economic signals are mixed. This is a perfect opportunity for long-term investors.
Such a decline in prices can provide opportunities for gradual buying, which could lead to profits in the future, as experts expect gold prices to reach record highs again by Diwali this year.
However, analysts also advise against investing all your money at once. For example, if you have to invest ₹1 lakh, invest only ₹25,000 now. If prices fall, invest a little more. It’s better to invest in small increments. Experts also advise investors to keep an eye on crude oil prices, inflation trends, and US Federal Reserve interest rates, as these have a significant impact on gold and silver prices.
