For some time, there has been a huge jump in gold prices, which is being discussed that there is a big risk in the stock market. Because it is often seen that the stock market also declines with rising gold prices. With rising gold prices, some people are also saying that the devastation like ‘Nixon Shock’ of 1971 is coming. After the 1971 ‘Nixon Shock’, gold prices rose above their lowest levels, which were stable at $ 35 an ounce from 1934. Gold prices continued to touch the sky for the next two decades, which increased even more due to excessive inflation and geopolitical risk.
The increase in gold prices along with global destruction as well as the stock market also declined. In view of this, Trump’s tariff shock is now being compared to ‘Nixon Shock’. It is being said that the continuous increase in gold prices can cause havoc like ‘Nixon Shock’. However, gold prices continue to fall for the last two days.
Brokerage said there is no risk, while ICICI Securities said that nothing like this is going to happen. Earlier, the increase in gold prices used to increase the risk in the market, but now gold and stock market have an unbreakable relationship. The continuous increase in gold prices is just a coincidence. The brokerage firm said that the increase in gold prices today does not mean that the stock market is declining, nor the increase in shares means weakness in gold.
Gold boom, not in barge: ICICI Securities says that gold will continue to rise until the tariff issue is resolved and the demand for gold of the central banks is met. But this will not mean that shares will decline. It can be a coincidence if the market declines during the gold bullion. Brokerage said it is wrong to use gold prices as a sign of long or short equity positions.
When gold and stock markets grow together, Brokerage says that there has been such a decline in the stock market before. Following the global financial crisis of 2008-09, the regulatory changes made by the central banks accelerated in the stock market in 2010, while gold prices continued to increase, leading to a positive correlation. A similar overlap was seen in the 1980s, when both gold and the stock market reached a record high.
