Amidst the increasing tension in West Asia, there has been a sharp jump in the demand for safe investments. The price of silver increased by Rs 4560 to Rs 2.70 lakh per kg. At the same time, the price of gold increased by Rs 830 to Rs 1.62 lakh per 10 grams.
Condition of gold and silver in global markets
During Asian trading, spot gold rose nearly 1% to $5,187 an ounce, while spot silver rose about 2.5% to $85.12 an ounce.
Why is the demand for safe assets increasing?
This rise in precious metals has come at a time when the US and Israel are continuously carrying out air strikes on Iran and Iran is also responding with missile attacks in many parts of the region. The escalating conflict has led to the closure of the strategically important Strait of Hormuz, disrupting global energy supply routes. This has increased uncertainty in global markets and investors are turning to safe assets. US President Donald Trump has expressed confidence in US military action. According to reports, the US Army sank an Iranian warship in international waters. However, Iran has rejected these claims, saying that its intelligence agency has not initiated talks with America to end the war. On the other hand, strong data from America’s service sector has reduced inflation concerns to some extent. According to the data, the US services sector has registered the fastest growth since mid-2022 due to the increase in orders and business activities. Meanwhile, the US Dollar Index slipped to 98, making dollar-denominated commodities more attractive to foreign investors. However, markets are now considering the US Federal Reserve’s next interest rate cut to be in September instead of July. Despite this, investors are expecting a rate cut of 25-25 basis points twice this year.