This was seen in the domestic bullion market on Wednesday. There was a strong rise in silver prices in Delhi and it jumped by Rs 4,000 to reach Rs 2.68 lakh per kg. At the same time, the price of gold also remained strong and it crossed Rs 1.61 lakh per 10 grams. According to market analysts, this rise in precious metals has been due to rising expectations of interest rate cuts in America and geopolitical tension.
What were the prices in the domestic market?
According to All India Bullion Association, silver prices increased by Rs 4,000 or 1.5 percent on Wednesday. With this surge, silver increased from Rs 2,64,500 to Rs 2,68,500 per kg. The shine of gold has also increased. There was buying momentum in gold of 99.9 percent purity, due to which its price increased by Rs 600 (0.4 percent) to Rs 1,61,300 per 10 grams. It had closed at Rs 1,60,700 in the last trading session.
Impact of Federal Reserve and US data
The economic signals coming from America are important behind this rise in the market. Saumil Gandhi, Commodity Analyst, HDFC Securities, says gold and silver prices have been supported by expectations of aggressive interest rate cuts by the Federal Reserve.
December retail sales figures in the US were weaker than expected, indicating a decline in consumer spending and slowing economic growth there. After these weak data, the market is now assuming that the Federal Reserve may cut interest rates three times this year, whereas till a week ago only two cuts were expected. The environment of low interest rates is beneficial for metals like gold and silver, which do not earn any interest.
Big fluctuations in the global market
A huge rise in precious metals was also seen in the global markets. Spot silver rose nearly 6 percent, or $4.71, to $85.51 an ounce. At the same time, gold was trading at $ 5,078.72 an ounce with a gain of 1.06 percent. According to Praveen Singh, Head of Commodities, Mirae Asset Sharekhan, the weakness in the US dollar has also supported gold prices. Investors are now waiting for the US non-farm payroll data, after which there is a possibility of further volatility in the market.
Geopolitical tension increases demand for safe investment
Apart from economic reasons, increasing tensions in the world have also turned investors towards safe investments. According to reports, Washington is considering blocking tankers carrying Iranian crude and could deploy additional naval fleets if talks over the nuclear program fail. Due to this stressful environment, there has been a rise in the demand for gold and silver.
