Curated By: Business Desk
Last Updated: October 12, 2023, 13:23 IST
These metals are considered the safest assets.
There is an inverse relationship between these unforeseen circumstances and metals like gold and silver.
The geopolitical tension between Israel and Palestine has been re-ignited after the attack by Iran-backed Hamas, a Palestinian militant group, on the former. The countries are leaving no stone unturned to safely bring home the people who are trapped there in the war zone. Amid these ramped-up tensions between the two countries, a surge has been recorded in the Gold prices in India, on the Multi Commodity Exchange (MCX). On Wednesday (11 October) at 02:36 pm, the price of gold on MCX was at 57,883 while silver was trading at 69,663. These prices are for futures trading (refers to trading using futures contracts).
In the last 4 days, the price of gold has witnessed a bullish trend by about Rs 1500, and silver’s price has also gained by Rs 3900 in the last 4 days. The question arises as to why gold and silver prices gain whenever there are tensions between two countries (as happened previously in Russia and Ukraine).
There is an inverse relationship between these unforeseen circumstances and metals like gold and silver. When there is no war-like situation, the bigger investors invest more money in the equity markets. The advantage of investing money in equities is that the investors get better returns in comparison to any other asset. There is a situation of global crisis, when there is a war-like situation between two countries.
It negatively impacts the market and the equities as well. More prominent investors sense this situation, reduce investment in equities, and start investing in gold and silver. These metals are considered the safest assets because the investors can compensate for the losses if they suffer in equity with gold and silver. This is the reason why the prices of gold and silver start moving upwards in times of crisis.
There is another reason behind the surge in gold and silver prices in the Indian markets. India is one of the largest consumers of gold because people buy gold and silver during the festive season. With the start of Navratri starting on October 15, people will start shopping for Dhanteras, Diwali, and then the wedding season. In such a situation, there will be an increase in gold and silver prices.
