Ever since the interest rates have been changed by the US Federal Reserve and crude oil prices have crossed $ 100 per barrel after increasing tensions in the Middle East, there has been huge volatility in the prices of gold and silver. Market experts believe that these fluctuations in the price of gold and silver are expected to continue in the coming days.
The biggest reasons behind this upsurge are American (US) economic data, ongoing tension in West Asia and changing prices of crude oil, which are having a direct and deep impact on the shine of both gold and silver.
American data coming this week will decide the movement of the market
According to experts, many important American economic data and inflation figures are going to be revealed in the coming days. Apart from this, Manufacturing PMI, statements of Federal Reserve officials and very important US Non-Farm Payrolls report will also be released.
The combined effect of all these will be clearly visible on the prices of gold and silver in the international market as well as the domestic market. On the other hand, geopolitical uncertainty between America and Iran is also playing an important role. US President Donald Trump has rejected Tehran's proposal to reopen the Strait of Hormuz and start nuclear talks within a week in exchange for lifting the naval blockade. Apart from this, the commodity market will remain closed on the occasion of Mahatma Gandhi Jayanti on coming Friday.
Gold became cheaper by 2.5% and silver by 3%
VP Jatin Trivedi, Commodity and Currency Research Analyst, LKP Securities, says that the market trend remains cautious at the moment and there is every possibility of more volatility. Investors are eyeing the upcoming US non-farm payrolls and unemployment data, which will determine the direction for the Federal Reserve's October policy decision.
Gold futures for October delivery on the Multi Commodity Exchange (MCX) closed last week at Rs 1.5 lakh per 10 grams, down by Rs 3,500, or about 2.3 percent. At the same time, silver futures fell by Rs 6,907 or 3 percent to Rs 2.34 lakh per kg. Trivedi said that last week gold kept trading in the range of Rs 1.5 to 1.54 lakh per 10 grams.
Heavy pressure of strong dollar seen on gold and silver
The dollar index continuously remaining above 101 is putting pressure on gold prices, because a strong dollar reduces the demand for bullion. In the global market, Comex gold futures for December delivery fell by $ 103.7 or 2.34 percent last week to $ 4,321.2 an ounce. The price of silver in New York also fell by $ 2.35 or 3.5% to $ 64.80 an ounce.
Pranav Mer, Senior Vice President, JM Financial Services Limited, said that due to selling pressure, international prices closed around $ 4,300 an ounce. There has also been a weekly decline in silver futures due to correction in industrial metals.
Impact of treasury yield and crude oil
The pressure is not just due to the currency, but US 10-year Treasury yields have reached their highest level since 2007, while 30-year yields are close to the 2004 record. Higher long-term yields affect the demand for precious assets like gold and silver.
At the same time, oil market is also an important factor. Despite Russia and Ukraine targeting energy infrastructure, crude prices remain under pressure due to increased supplies from Saudi Arabia and Iraq. Experts believe that in the coming time, the US Jobs report will be the next big test for gold, which will decide the direction of the market.