Gold And Silver Price Crash: Due to major changes in interest rates, dollar and crude oil prices in the global market Gold and silver pricesThere has been a sharp decline in Both the precious metals fell amid heavy selling pressure in the futures market, raising concerns among investors. Gold and silver have seen a fall of more than 6 percent in the last one week alone.
Gold and silver crash with opening in MCX
Futures market ie MCXHeavy selling was seen in gold and silver from the beginning today.
Gold (Gold October Future):
The previous closing price of gold was ₹1,51,729. Gold opened at ₹1,50,033 today and touched a low of ₹1,49,665 during the trading session. Gold fell by more than ₹ 2,000 during the day.
Silver December Future:
The previous closing price of silver was ₹ 2,35,441. Today, after opening at ₹ 2,32,536, silver fell further to ₹ 2,31,914. Silver prices saw a crash of over ₹ 3,500.
Down more than 6% in one week
Precious metals have seen a steady sell-off over the last few days. Due to this, the price of gold and silver has decreased by more than 6 percent in just one week.
This sudden weakness in gold and silver prices, which had reached highs recently, has caused huge losses for short-term investors.
The dollar index and bond yields became the biggest reasons
The biggest reason behind the decline in gold and silver prices is the strength of the US dollar and the rise in US bond yields.
The dollar index rose above 99, while the 10-year US bond yield rose above 4.80 percent.
Gold and silver by themselves are not interest bearing investment instruments. So when bond yields rise, investors move money out of non-yielding assets like gold and into interest-bearing instruments like bonds. Due to this, selling pressure has increased on precious metals.
Crude oil crosses $96, inflation worries rise
Rising tensions in West Asia are also having an impact on crude oil prices. With the price of WTI crude oil rising above $96 per barrel, there are fears of a renewed rise in inflation in the global economy.
Cost of crude oil increases transportation, production and energy costs. Inflationary pressures may increase as a result.
In this situation, it may be difficult for central banks to cut interest rates.
Interest rate cut likely to happen late
The biggest market concern is that central banks, including the US Federal Reserve, will not cut interest rates quickly enough if crude oil prices remain high and inflation rises.
Prolonged high interest rates are considered negative for gold and silver.
When interest rates remain high, fixed income and bond investments become more attractive, which may reduce investment demand for gold and silver.
Why did prices collapse despite safe-haven demand?
Investors generally choose gold as a safe investment when war, geopolitical tensions or economic uncertainty increase. It is called ‘safe-haven demand’.
At present, despite the increased tension in West Asia, the price of gold has not seen a rise.
The main reason for this is the strong dollar and high US bond yields. The pressure from both these factors has been so strong that even the safe-haven buying caused by geopolitical tensions has not been able to support gold prices.
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What should investors watch now?
The US dollar index, bond yields, crude oil prices and the interest rate policy of the US Federal Reserve will be most important for the direction of gold and silver in the coming days.
Precious metals may remain under pressure if the dollar and bond yields rise further. On the other hand, if global tensions become more severe or bond yields fall, safe-haven buying in gold may again be seen.
Currently, the gold-silver market is witnessing high volatility and investors are keeping an eye on global economic cues.
