Gold Price: Gold prices have fallen amid rising tensions in the Middle East over the Iran-Israel war. Gold typically becomes more expensive during times of crisis, but this time the tables have turned.
Gold becomes cheaper in a war environment.
Gold Price: On one hand, there's a war raging in the Middle East, Iran is threatening to raise oil prices to $200, and on the other, gold prices are falling. It may sound strange, but that's exactly what's happening. Let's understand what's going on. And is this the right time to buy gold?
When there is war, gold becomes expensive; then why is it cheap this time?
Usually, when tensions rise in the world, people invest in gold. Gold is considered a safe haven, but this time the tables have turned.
The Iran war has pushed oil prices past $100 per barrel. This has raised fears of rising inflation in the US. When inflation rises, the US central bank, the Federal Reserve, does not reduce interest rates, and when interest rates remain high, the dollar strengthens.
Goldman Sachs has also clearly said that now the Fed will not reduce the interest rate before September, and now this news has pulled gold down.
How much cheaper did it become in India?
Today, the price of 24-carat gold in Delhi is Rs 16,347 per gram.
Gold futures on MCX fell by ₹283 to ₹1,61,506 per 10 grams today.
Silver also fell by ₹1,991 to ₹2,66,500 per kg. This is a small relief after the rise of the last few days.
But the question is, should you buy it now?
If the war drags on, gold will surge again! If the Strait of Hormuz closes, both oil prices and inflation will spiral out of control. Gold demand will rise again. With wedding season approaching, domestic demand will increase. As the rupee weakens, even if gold becomes cheaper abroad, it won't have much impact in India.
What do experts say?
Experts say that the strong dollar and interest rate narrative are currently a hurdle for gold even if the war continues on the ground, meaning gold will benefit from the war only if the dollar is weak.
Experts recommend buying in small increments rather than all at once – if you're investing for the long term, this dip is a good opportunity. But if you're looking for short-term profits, consider Friday's PCE data and next week's Fed signals before deciding.
