On Tuesday, silver prices rose by Rs 10,975 to Rs 2.79 lakh per kg in the national capital, while gold rose by Rs 400. This was in line with the strong global trend as a weak US dollar increased demand for the safe-haven asset. According to the All India Bullion Association, ending a three-day losing streak, the white metal rose by Rs 10,975, or 4.09 per cent, to Rs 2,79,275 per kg (including all taxes) from Monday’s closing level of Rs 2,68,300 per kg. Gold prices also rose, with the metal of 99.9 per cent purity rising by Rs 400 or 0.24 per cent to Rs 1,64,700 per 10 grams (including all taxes). In the last session, this yellow metal had closed at Rs 1,64,300 per 10 grams.
Why did gold and silver become expensive?
Research Analyst Gaurav Garg of Lemon Markets Desk said that a significant rise was seen in the prices of gold and silver on Tuesday. The main reason for this was geopolitical development, because US President Donald Trump had indicated a possible solution to the ongoing dispute in West Asia, which has increased the interest of investors. He further said that this turmoil has destabilized the market environment, and fears of inflation due to skyrocketing crude oil prices have affected investor sentiment.
Increase in international market also
In the international market, spot silver rose USD 1.38 or 1.6 per cent to USD 88.33 an ounce, while gold was up almost 1 per cent at USD 5,172.86 an ounce. “Gold and silver gained momentum on Tuesday due to fall in US dollar and treasury yields providing relief to precious metals,” said Saumil Gandhi, Senior Analyst – Commodities, HDFC Securities. Gandhi said the dollar index came down after hitting a 15-week high in the previous session, while US treasury bond yields also eased, leaving scope for improvement in bullion prices.
Falling crude oil provided support
Echoing a similar sentiment, Kainat Chainwala, AVP Commodity Research, Kotak Securities, said silver rose to trade around USD 90 an ounce after Trump said the Gulf dispute could end soon, easing inflation concerns after a sharp fall in oil prices. The dollar initially strengthened when crude oil briefly rose to USD 119 per barrel, a move that was seen as potentially inflationary and supportive of the Federal Reserve’s more dovish policy stance. However, a sharp fall in crude oil prices later in the session helped the precious metals recover from their earlier lows. Chainwala said that gold also got support from the continuous demand from the Central Bank, People’s Bank of China increased the purchase of its gold reserves for the sixteenth consecutive month in February.