Safe haven no more? Why gold, silver prices are crashing despite war
India Today
As of 10:26 am on MCX, gold futures were trading at Rs 1,37,307, down Rs 7,185 or 4.97%. Silver futures were at Rs 2,13,600, down Rs 13,172 or 5.81%.
Gold and silver prices saw a sharp fall on Monday morning, even as global tensions remain high due to the ongoing conflict in West Asia. The drop has surprised many investors, as precious metals are usually seen as safe assets during such uncertain times.
As of 10:26 am on MCX, gold futures were trading at Rs 1,37,307, down Rs 7,185 or 4.97%. Silver futures were at Rs 2,13,600, down Rs 13,172 or 5.81%.
The fall comes after a strong rally in recent months, when both gold and silver had surged as investors rushed to safe-haven assets amid rising geopolitical risks and higher crude oil prices.
The key reason behind the fall of gold and silver is that prices had already risen sharply before this correction. Investors had bought heavily during the early phase of the conflict, pushing gold and silver to very high levels. This led to a situation where there was strong demand for physical gold and silver, and in some cases, even shortage in supply.
Now, with prices at elevated levels, many investors are booking profits. This has led to a sharp pullback.
Another major reason is the shift in interest rate expectations globally. With crude oil prices staying above $110 per barrel, inflation concerns have increased. This has reduced the chances of interest rate cuts and instead raised the possibility of rate hikes.
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The gold rate today is around Rs 1.5 lakh per 10 grams for 24-carat gold, while 22-carat gold is near Rs 1.4 lakh, with prices edging higher after recent losses. Silver is also seeing a slight uptick after a volatile phase.
Early indicators suggest a positive start. GIFT Nifty futures were trading at 23,250.5 at around 08:24 am, indicating that the Nifty 50 may open above Thursday's close of 23,002.15.
With multiple energy hubs under threat, the risk to global supply chains has increased sharply. For countries like India, which depend heavily on imports, this means higher costs and tighter supply in the near term.
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