There was a sharp fall in the prices of gold and silver in the global market on Monday. Selling was seen in both the precious metals under pressure from rising geopolitical tensions and a stronger dollar.
The price of gold on Comex fell nearly 3% to $ 4,462 an ounce. It is noteworthy that before this, gold had fallen by about 11% last week, which is considered to be its biggest weekly fall since 1983. At the same time, during Asian trading, the price of silver also fell by about 3% to $ 67.5 an ounce.
Why are gold and silver prices falling?
According to experts, the rise in crude oil prices has increased inflation concerns. This has weakened the hopes of soon cutting interest rates by other central banks including the US Federal Reserve. Since gold is a non-yielding asset, in such an environment its demand decreases and prices come under pressure.
Apart from this, the strength in dollar and US bond yields is also proving negative for gold and silver. Due to the strong dollar, gold becomes expensive for investors investing in other currencies, due to which its demand decreases.
West Asia tension increases uncertainty
The volatility in the oil market increased further when US President Donald Trump gave Iran an ultimatum to reopen the Strait of Hormuz within two days. He warned that failure to do so could lead to possible attacks on Iran’s power plants.
In response, Iran warned that if its bases were attacked, it could completely close this important sea route and target energy, IT and water supply infrastructure.
Market panic due to military activities
According to Reuters report, America is sending thousands of additional marines and marines to West Asia. This has further increased the tension in the region, the impact of which is clearly visible on the global financial markets.
Analysts say that at present there is increased uncertainty and risk in the market. In such a situation, the inclination of investors is shifting towards safe but yielding options, due to which gold and silver may remain under pressure.