Gold and silver reached new all-time highs in the international market on Friday. A weaker US dollar, rising geopolitical tensions, and concerns about the independence of the US central bank (Federal Reserve) led investors to seek safe-haven assets, resulting in a sharp surge in the prices of precious metals.
International Market Overview
In early trading on Friday, the price of gold crossed $4,960 per ounce and was on track for a gain of more than 7% for the week. Silver also reached a record level of nearly $97 per ounce. Gold was trading up 0.5% at $4,959.39 per ounce, and silver jumped 0.7% to $96.91 per ounce.
According to analysts, increasing pressure from the US president on the Federal Reserve, tensions in regions like Venezuela, Iran, and Greenland, and global uncertainty have increased demand for safe-haven investments. Investors are shifting towards tangible assets like gold and silver instead of bonds and currencies, a phenomenon known as the "debasement trade" in the market. This is an investment strategy where investors put money into assets with limited supply, such as gold, silver, Bitcoin, and other commodities, to hedge against the devaluation of fiat currencies (such as the dollar and euro) and government bonds.
Record Highs in the Domestic Market
The surge was also reflected in the Indian market. On MCX, the price of gold jumped nearly 4% on Thursday, closing at ₹1,56,540 per 10 grams and reaching a record high of ₹1,57,086. Silver rose 0.87% to close at ₹3,26,500 per kg, while its lifetime high was ₹3,35,521 per kg.
Why the Surge After a Recent Dip?
Gold and silver had also witnessed a sharp one-day decline recently. This was due to the US president adopting a softer stance on tariffs against Greenland and European countries, which increased risk appetite in the market and reduced demand for safe-haven investments. However, strong US economic data, a weaker dollar, and ongoing geopolitical tensions have once again pushed gold and silver prices higher.
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