Amidst the war-like situation related to Iran, in the beginning of Thursday, the fourth trading day of the week, on one hand, there was a huge fall in the stock market and Sensex fell by about 1800 points, on the other hand, there was relief news for gold and silver buyers. Gold and silver prices fell again on Thursday amid the US Federal Reserve’s decision on interest rates and increasing tension in the Middle East.
How is the price of gold and silver decided?
The prices of gold and silver are decided daily and many important factors are responsible behind them. In the international market, the prices of these metals are determined in US dollars, hence changes in the dollar-rupee exchange rate have a direct impact on their prices. If the dollar strengthens or the rupee weakens, gold and silver prices in India rise. India imports most of the gold it needs, so customs duty (import duty), GST and other local taxes also affect their prices. Apart from this, global market turmoil such as wars, economic recession or changes in interest rates also have a direct impact on gold prices. When uncertainty increases at the global level, investors prefer safe options like gold rather than stocks or other risky investments. In India, gold is not only a medium of investment but also deeply linked to tradition and cultural beliefs. Buying gold on weddings, festivals and other auspicious occasions is considered auspicious, which increases its demand and affects prices.
Big fall in gold and silver
US spot gold fell 1.22 percent to $ 4836 an ounce, while spot silver fell 2.25 percent to $ 75.75 an ounce. On the domestic futures market MCX, gold fell to around Rs 1.55 lakh per 10 grams and silver fell to around Rs 2.50 lakh per kg. According to Gaurav Garg, Research Analyst of Lemon Market Desk, the main reason for the recent fluctuations in gold and silver is the caution of investors before the decision of the US Federal Reserve. Due to the ongoing tension in the Middle East and the rise in crude oil prices, concerns about inflation have increased, due to which investors are adopting a cautious attitude. It is noteworthy that it has been almost three weeks since the tension in West Asia and at present there is no clear hope of peace. At the same time, as expected, the Federal Reserve has not made any change in the interest rates for the second consecutive time, although before this it had cut the rate by 0.25 percent three times in a row.
