Immediately after the announcement of the ceasefire between America and Iran, there was a tremendous rise in stock markets around the world. There was a huge surge in markets from America to Asia. In the Indian stock market, both Sensex and Nifty gained over 3.60 per cent. Along with the rise in the stock market, gold and silver prices also improved significantly.
On Wednesday, gold and silver prices rose sharply during intraday trading on the Multi Commodity Exchange (MCX). Gold rose by more than ₹4,000 to ₹154,300 per 10 grams. Silver prices also rose significantly, rising by ₹13,652 to ₹245,000 per kg. Despite the rise in stock markets and fall in crude oil prices, the prices of precious metals are continuously rising. This shows that investors are still cautious and prefer safe-haven assets like gold. Let us understand the reasons behind this surge in gold and silver prices.
Why did gold and silver prices increase?
Experts say that gold is continuously benefiting from its old appeal as a safe investment. Although the tension has reduced somewhat, the internal uncertainty has not yet completely ended. Aksha Kamboj, Vice President of India Bullion and Jewelers Association (IBJA), said that gold prices are continuously moving upward due to the news of ceasefire between Iran and America. Although the ceasefire is aimed at reducing existing tensions, it has also strengthened the appetite among investors to invest in gold; Gold acts as a reliable safe asset in times of uncertainty.
A caution about silver
He further said that although the overall market environment seems positive, there is still a possibility of some volatility in the short term. Silver prices have also seen a sharp rise due to both investor interest and industrial demand. Kamboj said that in view of the ceasefire agreement between Iran and the US, positive sentiment from investors and sustained demand from industries have led to the rise in silver prices. However, he cautioned that silver is more volatile than gold, which means prices can move quickly in either direction.
What should investors keep in mind?
According to Ponmudi R, CEO of Enrich Money, the ceasefire has improved the global environment and reduced the fear of protracted conflict. He said the announcement of a two-week temporary ceasefire between the US and Iran has significantly improved risk appetite globally, reducing concerns about a prolonged conflict and potential supply disruptions. He further said that gold is currently trading in the range of ₹153,000 to ₹155,000. If it breaks ₹155,000 level, prices may move towards the range of ₹158,000 to ₹160,000. On the contrary, a drop below ₹152,000 could see further downside. Silver prices remained in the range of ₹242,000 to ₹245,000. A move above ₹245,000 may take the prices towards ₹250,000, while a fall below ₹240,000 may lead to a decline in prices.
Should investors buy or sell now?
Experts are advising caution rather than aggressive buying at current levels. In the case of gold, investing in installments over time, rather than investing a lump sum at high prices, may prove to be a safer strategy. In the case of silver, investors need to be even more cautious, as it is inherently highly volatile. Instead of chasing rising prices, a better strategy might be to buy when prices fall.