Headlines of preparations for war between the US and Iran and Donald Trump’s announcement of 15% global tariffs have further increased the demand for safe-haven investments in gold and silver. At around 9:05 am today, April gold futures on MCX rose ₹3,700, or 2.4%, to ₹160,600 per 10 gram from Friday’s closing price. Meanwhile, silver contracts for March delivery on MCX were trading 6%, or ₹15,200 higher, at ₹268,120 per kg. Gold prices on COMEX were also up 2%, or $109, at ₹5,189.60 an ounce. Silver was also up 5.16%, or 6%, to trade around ₹87.505 an ounce.
US-Iran tensions
The ongoing US-Iran conflict is having a major impact on global equity markets, as was seen on Thursday when the Indian benchmark index witnessed heavy selling pressure. On Friday, Trump again warned that if Iran fails to make a proper nuclear deal, war could break out. In response, a major US military deployment is underway in the Middle East. It includes 13 warships including the aircraft carrier USS Abraham Lincoln and frigate destroyer. Additionally, the world’s most dangerous nuclear aircraft carrier, the USS Gerald R. Ford, seen entering the Mediterranean Sea. The US has also deployed dozens of fighter jets in the Middle East.
Uncertainty in global trade
Meanwhile, the US Supreme Court declared Trump’s worldwide tariffs illegal. After this, Trump signed documents imposing 10% tariff on imports from all countries. Then, on Saturday, they suddenly increased the tariff to 15%. This has created uncertainty in global trade. In this tense environment, people are withdrawing money from the stock market and investing it in safe investments like gold and silver.
Why are gold and silver the first choice of investors?
Gold and silver have already been reliable assets. In difficult times, companies may go bankrupt and their stock prices may fall. On the contrary, history shows that in difficult times the price of gold does not decrease but increases. The price of gold and silver has remained the same for thousands of years. When inflation increases, their prices also increase, which increases purchasing power, making gold a preferred option for investors in difficult times. Another reason for the increase in demand for gold and silver is that the stock market and the gold market have an inverse relationship. In difficult times, when the stock market falls, the gold market rises. Investors then sell their stocks and invest in gold and silver to mitigate losses and balance their portfolios. Additionally, gold can be sold immediately to get cash, which comes in handy in difficult times. This is the reason why gold and silver have remained the favorite choice of investors for years.
