If there is a fire in crude oil, there will be a big explosion. Gold and silver will fall face down as soon as it crosses $120, know the real reason. – ..

News India Live, Digital Desk: A period of ups and downs continues in the global market and meanwhile, a news is coming from the commodity market which can shock the investors. If you are also thinking of investing in gold and silver or have already invested, then this news is very important for you. Market experts believe that the rise in crude oil prices can prove to be an ‘alarm bell’ for the bullion market.

What is the dangerous connection between crude oil and gold?

It is generally believed that the shine of gold increases when inflation increases, but this time the equations look different. If international crude oil prices cross the psychological level of $120 per barrel, it will have a direct impact on the global economy. According to experts, the huge increase in oil prices will increase the pressure on central banks around the world to increase interest rates. When interest rates rise, investors move money out of ‘non-yielding assets’ like gold and into bonds and dollars, which can lead to a massive crash in gold and silver prices.

Dollar strength will increase investors’ tension

The rise in crude oil prices directly means the strengthening of the US dollar. Since gold is traded in dollars in the international market, it becomes expensive for countries with other currencies to buy gold as the dollar strengthens. This reduces demand and prices start slipping downwards. Market experts say the $120 level is a ‘breaking point’ where a liquidity crisis could arise and investors may sell their precious metals holdings to meet margin calls.

Dark clouds are hovering over silver too

Along with gold, it is also likely to have a bad effect on the health of silver. Silver is used extensively not only in jewelery but also in the industrial sector. Rising crude oil prices increase transportation and manufacturing costs, which could dampen industrial demand. This is the reason why if oil prices rise, the shine of silver may fade more than that of gold.

What is the experts’ advice for investors?

At present there is an atmosphere of uncertainty in the market. Experts suggest that at this time it would be better to adopt a ‘wait and watch’ strategy instead of making a lump sum investment. If you must buy, add gold to your portfolio gradually as the fall occurs. It would be wise at this time to keep a close eye on every move of crude oil, because the figure of $120 can prove to be a trailer of a big ‘crash’ for the bullion market.