Gold price continues to rise amid growing geopolitical tensions

Gold price continues to rise amid growing geopolitical tensions

New Delhi, April 8 (IANS) Gold rose on the Multi Commodity Exchange (MCX) on Monday as prices of the precious metal shot up to a record high in the international market amid rising geopolitical tensions in Central Asia.

Gold futures, maturing on June 5, 2024, stood at Rs 70,981 per 10 grams on the MCX, after recording an increase of Rs 345 or 0.49 per cent over the previous close of Rs 70,636.


In the international market spot gold was up 0.6 per cent at $2,343.89 per ounce after hitting a record high of $2,353.79 earlier in the session.

Gold prices have risen by 12 per cent so far this year with central banks buying the yellow metal in large quantities and the increases safe-haven demand for the precious metal amid escalating tensions due to the Israel-Hamas conflict and no end in sight to the Russia-Ukraine war.

The reduction in interest rates signalled by the US Fed also leads to an increase in gold buying as investors see lower returns on the financial assets.

The price of 24-carat gold in Delhi on Monday was hovering around Rs 71,430 per 10 gms while in Mumbai it was around Rs 71,280 per 10 gms. The price in Chennai was higher at Rs 72,150 per 10 gms.

The demand for gold in the Indian market is fuelled by the need for precious metal in marriages as it is gifted to brides and grooms in large quantities as jewellery.

However, jewellers are of the view that the soaring gold prices are dampening this demand. This is also reflected in the declining imports of the precious metal, according to them.

That’s right, the price of gold has been on an upward trend in 2024 due to several factors, including growing geopolitical tensions. Here’s a breakdown of why gold is getting more expensive:

  • Geopolitical Tensions: Increased international conflicts, like the ongoing war in Ukraine and the Israel-Hamas conflict, create uncertainty in the global market. Investors flock to gold during such times as it’s seen as a safe haven asset, meaning its value tends to hold steady or even rise when other investments become riskier.
  • Central Bank Buying: Central banks around the world are reportedly increasing their gold reserves, which also contributes to a price hike. This buying signifies confidence in gold’s long-term value.
  • Lower Interest Rates: If the US Federal Reserve reduces interest rates, as some experts predict, it can make gold more attractive to investors. This is because gold doesn’t offer any interest payments, so when interest rates on other assets like bonds fall, gold becomes relatively more appealing.

Current Situation:

  • As of April 2nd, 2024, gold prices reached record highs, exceeding $2,350 per ounce in the international market [1].
  • This translates to an increase of around 12% so far this year [1].

Looking Ahead:

  • The future direction of gold prices depends on how geopolitical tensions unfold and the decisions of central banks regarding interest rates.

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