According to the Kobeshi Letter report, the unexpected and sharp selloff in precious metals due to the prolonged Iran War is indicating increasing tension in the global markets. Despite increasing geopolitical tension, the market cap of gold and silver declined by about 2 trillion dollars in a few hours. The special thing is that after geopolitical tension, there is a rise in the prices of gold and silver, but the current behavior is completely opposite.
The Kobeshi letter explained that this opposite behavior is being seen at a time when oil prices are volatile and equity futures are stable, breaking the general correlation where rising geopolitical risks drive up the prices of both crude oil and safe haven assets like gold. According to experts, there are signs of increase in global inflation due to rise in crude oil prices. Inflation figures have also increased in many countries. Because of which many central banks around the world have postponed their interest rate reduction plans for a long time.
According to experts, Fed, EU, ECB and other central banks of the world are either planning to increase interest rates. Or talking about putting it on hold. Due to which an increase in bond yield is being seen. This is the reason why the dollar index is rising and the prices of gold and silver are falling. Let us also tell you what kind of figures have come out regarding the prices and market cap of gold and silver.
Why is the decline coming?
According to the analysis of the Kobeshi letter, the possibility of forced liquidation by large institutional investors has also been pointed out. During times of market stress, investors often sell liquid assets like gold to meet margin calls or offset other losses. Due to which the decline in traditional safe investment options is also sharp.
Additionally, due to fears of ever-increasing inflation due to high oil prices due to risks around the Strait of Hormuz, central banks around the world are considering pressing the pause button or raising interest rates once again. Due to which both the yield and the US dollar are strengthening. The pressure of which is visible in the prices of gold and silver.
The Kobeshi letter further said that growing “news fatigue” over war and a lack of liquidity in some sectors are increasing volatility across all asset classes, leading to sharp and sudden price movements in both directions. Despite the ongoing struggle, gold is increasingly behaving as a risky asset rather than a safe investment option. This change, moving in tandem with equities and not acting as a hedge, has led many investors to reevaluate traditional market assumptions.
Gold fell by about Rs 15 thousand
If we talk about the country’s futures market Multi Commodity Exchange, then the price of gold has seen a decline of about Rs 15 thousand during the trading session. Due to which the price of gold came to a lower level of Rs 1,29,595 per ten grams. By the way, today gold opened at Rs 1,40,158. At 2:20 pm, the price of gold was seen falling by Rs 9,813 to Rs 1,34,679. On the other hand, if we talk about silver, it fell by Rs 27,129 during the trading session and came below Rs 2 lakh to Rs 1,99,643. However, at 2:20 pm, silver is trading at Rs 2,09,722 per kg with a fall of Rs 17,050.