There has been a huge fall in the prices of gold and silver today in the global market as well as in the domestic market. In a single trading session, gold became cheaper by about Rs 2100, while the price of silver went up to Rs 7300. The direct impact of this strong selling was visible on Gold ETFs as well as Silver ETFs, which closed in the red.
If we look at the data till 2.40 pm on Tuesday, a decline of 1.42% was recorded in the prices of gold. With this, the price of 10 grams of gold fell by about Rs 2100 to Rs 1,46,010. There came a time during trading when it slipped to Rs 1,45,510.
The situation of silver was even worse. There was a big fall of more than 3%, due to which the price of silver per kg fell by Rs 7300 and was trading at Rs 2,27,010. In between, this figure had also touched a low of Rs 2,25,666. The trend of international markets also remained exactly the same. There gold was seen down by about 2%, while a huge fall of more than 5% was recorded in silver. Gold and silver ETFs have also fallen by almost the same amount.
Growing fear of interest rates
The biggest trigger behind this huge decline is coming from America. The US Central Bank (Federal Reserve) has indicated that it may increase interest rates this year to completely control inflation. According to Nitin Kedia, National General Secretary of All India Jewelers and Goldsmiths Federation (AIJGF), there is a strong possibility of interest rates increasing in America in September itself. Making the situation more serious, Bank of America has clearly predicted to increase interest rates three times in the year 2026.
Whenever interest rates rise, investors leave gold and silver and rush towards government bonds. Its simple mathematics is that bonds earn fixed interest, whereas precious metals do not earn any interest. People who have been investing for a long time are now booking profits. This is the reason why tremendous profit booking is being seen in ETFs also.
Strong US dollar pressure
It is an established rule in the commodity market that the strength of the dollar weighs heavily on gold. In recent times, an increase has been seen in the dollar index. The strengthening of the dollar simply means that buying gold and silver has now become a more expensive deal for buyers holding other foreign currencies. When prices increase, global demand naturally decreases, which ultimately creates downward pressure on prices.
geopolitical tension decreasing
Gold has always been considered a companion of crisis i.e. ‘safe haven asset’. When there is war or tension in the world, people leave the stock market risk and invest money in gold. But now the picture is changing. There has been a lot of positive progress in the ongoing talks regarding a peace agreement between America and Iran. This diplomatic success has reduced the risks looming at the global level to a great extent. Due to less fear in the market, investors have taken off the cloak of safe investment. They are moving their money out of gold and silver and back into risky assets, resulting in this huge fall in prices.
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