The US-Iran conflict in West Asia has not only affected the stock markets, but also the precious metals, specially gold and silver. The gold and silver prices, after reaching their lifetime highs on January 29, crashed by 22 per cent and 46%, respectively. City-based jewellers said that, the gold price, after reaching an all-time high of Rs 1,86,850 per 10 grams on January 29, had plunged to Rs 1,41,934 per 10 grams (Including GST) on Monday. It crashed by Rs 44,913 per 10 grams or 22 per cent from its all-time high in the Itwari Sarafa Bazar. Similarly, silver reached its record high level of Rs 4,14,000 per kg earlier on January 29 and has now nose-dived to Rs 2,23,304 per kg (Including GST). Silver tumbled by Rs 1,93,271 per kg or 46 per cent from its record high. Rajesh Rokde, Chairman of the All India Gem and Jewellery Domestic Council (GJC) said that, the gold and silver prices crashed due to a combination of factors, including surge in crude oil prices, profit booking, stronger US dollar, and shifting investor sentiment towards riskier assets. Another major reason is that, the US Federal Reserve and major central banks of the world are indicating a pause in lowering interest rates in their countries due to the West Asia conflict.

 

Also, US and Russia are holding consultations regarding buying crude oil in US dollars, affecting the de-dollarisation process to a larger extent. As the West Asia war continues, countries in the Middle East and Europe are selling gold from their reserves and buying arms and ammunition to safeguard themselves from future threats. Also, there are fears of world recession, so people are holding on to cash in case of emergencies. All these factors have affected the steep correction in gold and silver prices.

 

He added that, gold usually rallies during geopolitical uncertainties, but the US-Iran conflict and other factors, are currently dominating over the traditional safe haven appeal. He suggested that, while gold and silver prices have corrected sharply, the current levels offer buying opportunities for investors. Rokde elaborated that, in case the US-Iran war comes to an end, the gold and silver prices will begin to rise again. He maintains that the future outlook for gold and silver was bright. On the Multi Commodity Exchange (MCX), the yellow metal for April delivery slumped by Rs 8,089, or 5.6 per cent, to Rs 1,36,403 per 10 grams. Similarly, silver for May delivery slumped Rs 20,409, or 9 per cent, to Rs 2,06,363 per kilogram. Experts said that, gold and silver prices experienced a significant decline on Monday amid a sharp sell-off in precious metals, driven by rising inflation fears and a surge in crude oil prices, exacerbating concerns about global economic stability. Kishor Sheth, Director of Batukbhai Jewellers, Shankar Nagar said that, the gold prices witnessed a steep correction due to West Asia conflict.

 

This correction could offer people and investors a good opportunity to buy gold and silver as per their budgets. Shrikant Bhandarkar, Director of Bhandarkar Jewellers said that, the crash in gold and silver prices was fuelled by aggressive profit-taking, with institutional investors and hedge funds liquidating their positions after a significant rally in the metals. He believes that, retreating gold and silver prices is a temporary phase and prices will travel on an upward trajectory within the next six months. People look at lower prices as an opportunity to buy for further appreciation.