There was a decline in the prices of gold and silver in early trading on Monday (16 March). The main reason for this is the strength of the US dollar and the cautious attitude of investors before the meetings of major central banks to be held this week. Gold futures on COMEX fell about $ 56.70 (1.12%) to $ 5,005 an ounce. Whereas silver futures fell by $ 1.738 (2.14%) to reach $ 79.605 per ounce.
Vigilant atmosphere in the market
Investors are being very cautious at the moment as rising tensions in West Asia are affecting global markets and energy prices. Oil prices also remain at high levels due to the ongoing conflict in the Gulf region. Due to this, concern about inflation has increased in the world and there remains uncertainty regarding the monetary policy of central banks.
Oil prices also high
Currently, Brent crude is trading around $105 per barrel, while US crude oil is around $100 per barrel. Higher oil prices may increase inflationary pressure, which policy makers are keeping an eye on.
Keep an eye on the decisions of central banks
This week many big central banks like the US Federal Reserve, European Central Bank and Bank of England are going to announce their monetary policy decisions. The market expects that these banks will not make any changes in interest rates at present. However, investors will keep an eye on what their stance is regarding interest rates going forward.
expert opinion
Pranav Mer, Vice President of Commodity and Currency Research at JM Financial Services, says that investors are keeping an eye on the ongoing developments in West Asia. If tension increases or decreases, sharp fluctuations may be seen in the market. He said that in recent times, due to the strong dollar and high crude oil prices, there has been increased expectation that global central banks may delay cutting interest rates. This has put pressure on bullion prices.
Demand may remain as a safe investment
However, experts believe that due to geopolitical tension, safe haven demand (demand for safe investment) can support gold and silver to some extent.
pressure on silver also
There is also pressure on silver prices. The reason for this is the decline in industrial metals after the recovery and the strengthening of the dollar. Generally, when the dollar strengthens, precious metals become expensive for investors from other countries.
Keep an eye on the Strait of Hormuz
The market is also eyeing the Strait of Hormuz, which is an important oil shipping route for the world. There are reports that many countries can come together and form an alliance, which will provide security to the ships passing through this route. Experts say that the bullion market may remain volatile in the coming days, as investors are keeping an eye on geopolitical risks, oil prices and interest rate signals from central banks.